Join gaming leaders online at GamesBeat Summit Next this upcoming November 9-10. Learn more about what comes next.
Fortis Advisors, a seller representative acting on behalf of Kixeye’s shareholders, filed the lawsuit today in Delaware’s Chancery Court. In it, Kixeye alleges that Stillfront deliberately breached a merger agreement over a $30 million “earnout,” or a bonus to be paid if Kixeye hit certain milestones. The lawsuit gives a window into normally private negotiations between companies.
We’ve asked Stockholm, Sweden-based Stillfront for a comment. In June 2019, Stillfront bought Kixeye for $90 million in an agreement that had an earnout of $30 million based on Kixeye’s expected financial performance for 2019.
Kixeye made popular real-time strategy games for mobile devices and PCs. The titles included games such as War Commander: Rogue Assault, Battle Pirates, War Commander, and Vega Conflict.
Three top investment pros open up about what it takes to get your video game funded.
Fortis accused Stillfront of doing some creative accounting that made Kixeye’s results look worse than they actually were in an allegedly bad faith attempt to evade the earnout payment.
Under the original deal, Stillfront did not acquire all of Kixeye. Kixeye planned to spin off operations related to the unreleased game Kingdom Maker, which was still under development.
The earnout would be based on a non-GAAP measure of financial performance dubbed adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). Stillfront allegedly retroactively “readjusted” or intentionally manipulated its pre-merger expenses, making it all but impossible for Kixeye to hit its earnout target.
Stillfront also allegedly dramatically cut spending on Kixeye’s games after the merger, even though it had described the games as stable and profitable before that. Prior to the acquisition, Kixeye had more than 70 million unique users.
In January 2020, Stillfront announced it had laid off the Kingdom Maker team, eliminating about 20 jobs. But it’s not clear why they said that, as the Kingdom Maker team moved over to Global Worldwide where it continues on the game.
GamesBeat’s creed when covering the game industry is “where passion meets business.” What does this mean? We want to tell you how the news matters to you — not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it.
How will you do that? Membership includes access to:
- Newsletters, such as DeanBeat
- The wonderful, educational, and fun speakers at our events
- Networking opportunities
- Special members-only interviews, chats, and “open office” events with GamesBeat staff
- Chatting with community members, GamesBeat staff, and other guests in our Discord
- And maybe even a fun prize or two
- Introductions to like-minded parties