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MTG undertakes strategic review, targets US listing

Esports entertainment company Modern Times Group (MTG) has today (Tuesday) launched a strategic review of its gaming vertical, which could result in the formation of a joint venture partnership and an additional listing in the US.

Stockholm-headquartered MTG has operated in its current guise since its media and television business, Nent, was spun off last year. The company said it had decided to undertake the strategic review in order to evaluate the best route to “crystalise value” for shareholders.

The outcome of the strategic review could result in a JV partnership for the gaming vertical to get access to capital and new geographies, or MTG becoming a global pure play esports company. MTG said value creation in the gaming vertical has been significant since its acquisition of developer InnoGames.

Since last year’s split, MTG said it has been approached with a range of different alternatives for the company to become even more competitive. As part of the strategic review, MTG will explore an additional listing in the US, pointing to its status as one of the biggest esports markets in the world.

MTG president and chief executive, Jørgen Madsen Lindemann, said in a statement: “We have the opportunity to establish MTG as a global leader in the esport industry and we will accelerate value creation by further combining and extracting synergies in our ownership of the two strongest esport brands globally, aided by our solid financial position and commercial operational expertise.

“Through the strategic review, we will consider all options for our gaming vertical to crystalise and create maximum shareholder value, and at the same time evaluate the potential for MTG as a global pure play esport company.”

After the strategic review is completed, MTG said it intends to assess its financial principles and cash requirements going forward in accordance with the company strategy of growing organically and through acquisitions. The outcome of the review could lead to a potential redistribution of any excess cash to its shareholders.

Independent and in parallel to these processes, MTG is considering implementing an operational efficiency program. MTG said this is expected to generate annual savings of around SEK50m (€4.6m/$5.1m), with approximately 75 per cent being realised in 2020 and the remainder in 2021.

Regarding the strategy for a JV, Lindemann (pictured) told the Reuters news agency that a potential partner could hail from North America or South Asia. “That could be with private equity,” he added. “That is of course compelling, to get access to more capital, get access to more geographies.”

Chinese live-streaming platform Huya last month agreed a strategic joint venture with MTG that will see it acquire a minority stake in the latter’s esports organisation, ESL. Also in September, MTG, which owns the ESL and DreamHack esports organisations, moved to increase the monetisation of sponsorship and media rights in professional gaming with the launch of ESL Pro Tour, a new Counter-Strike: Global Offensive competition circuit that will feature a prize fund of over $5m (€4.5m).