Media and Games Invest plc (XTRA:M8G) (MGI) entered into an agreement to acquire KingsIsle Entertainment, Inc. for $210 million on January 15, 2021. Under the terms of transaction, Media and Games Invest (MGI) will pay up to $126 million as consideration on a cash- and debt-free basis plus $84 million that may be paid earn-outs dependent on the level of future revenues. The total consideration on a cash and debt free basis is divided into a fixed component comprising four installments totaling $126 million: $63 million will be paid at closing; $25.2 million will be paid in cash on or before June 30, 2021; $12.6 million will be paid in cash on or before December 31, 2021 and $25.2 million will be paid in cash on or before June 30, 2022. Three earn out levels which could result in $84 million of additional payments will be paid as: $10 million if the full year gross revenues in 2021 ranges between $30 million and $35 million, in cash payable until March 31, 2022; $32 million if the full year gross revenues in 2021 is more than $35 million, in cash payable until June 30, 2022 and $42 million if the full year gross revenues in 2021 exceeds $55 million, in cash payable on December 31, 2022. €25 million (approximately $31 million) of consideration paid at closing will be paid from proceeds from Oaktree Capital Management in exchange for issuance of 11.6 million new ordinary shares of MGI at a price €2.14 ($2.59) and the fixed deferred consideration of $63 million will be paid over the coming 18 months using liquidity and cash flow of the MGI Group. The transaction is expected to be completed by January 25, 2021. The transaction is transformative for MGI as it is expected to materially increase the size and profitability. On a proforma basis MGI’s EBITDA would have been increased by approximately 60% as a result of the acquisition for the first nine month of 2020. MGI’s combined group EBITDA margin grows on a pro forma January – September 2020 basis from 21% to 28% post the transaction. The transaction is immediately accretive for the MGI shareholders based on this multiple combined with an expected increase of earning per share. The fixed cash consideration of $126 million represents an EV/EBITDA multiple of 6.0x based on the EBITDA Guidance. Taking into account the earn-out consideration, the EV/EBITDA multiple may increase to a range of 5.8x – 7.3x of the EBITDA Guidance. This assessment is based on an increased EBITDA and includes the incremental EBITDA that may occur from a higher revenue base should an earn out become payable. Post transaction, the net leverage ratio is at the upper end of the stated target range of 2-3x, while the lower end is planned to be reached within 12-18 months due to stronger Free-Cashflow generation combined with an increasing EBITDA. Hunton Andrews Kurth LLP acted as legal advisor to KingsIsle Entertainment, Inc.