Large Swedish holding Enad Global 7 AB (EG7) has signed a letter stating its intention to sell its subsidiary Innova Intellectual Properties S.à rL (“Innova”). The sale is planned to be structured as a buyout of the company by management (MBO), and the purchase price is set at €32 million. Recall that at the beginning of 2021, the holding acquired a Russian publisher for €109, that is, the amount is almost three times less.
In the fourth quarter of 2021, Innova generated 13% of EG7’s consolidated revenue, which corresponds to SEK 74.1 million. During the same period, it provided 22% of EG7’s consolidated EBITDA, which corresponds to SEK 26.4 million. Since the acquisition, the company has operated as an independent publisher and as of March 31, 2022, had a book value of SEK 1.1 million. This had a negative impact on the income statement in the amount of approximately SEK 800 million excluding a supplier loan after the closing of the deal.
EG7 also decided to move Toadman Interactive’s Russian operations to Western or Eastern Europe. The move may affect some of the studio’s current projects.
“Over the past few weeks, we have been monitoring the current activities of the company in Russia and after a thorough assessment, we have come to the conclusion that parting with Innova will benefit both parties. Following the completion of the transaction, EG7 will no longer operate in Russia and will not be exposed to ongoing uncertainty in the region. The move of the Toadman team also creates an important platform for further growth,” said Ji Ham, Acting CEO of EG7. “This decision has minimal impact on our group companies outside of Russia/CIS. Our top priority is to provide full support to the Innova and Toadman teams as we help them through this process.”
It is worth noting that the sale of Innova must be approved by the company’s general shareholders’ meeting, and may also require the approval of the Russian authorities before the transaction is fully completed.