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Aristocrat offloads Plarium to Modern Times for $820 million, eyes real-money gaming

Australia's biggest gaming company, Aristocrat Leisure, has agreed to sell off Plarium, a developer of the hit game RAID: Shadow Legends, to Modern Times Group, which is listed in Stockholm, and will pay up to $820m for the acquisition. This purchase deal now aligns Aristocrat with its movement towards real-money gaming away from mid-core and casual gaming.

The deal will include an upfront fee of $620 million with an additional $200 million depending on Plarium hitting financial milestones between 2025 and 2028. Aristocrat shares fell 1.1% on the news although they reached an all-time high earlier of A$66.10. Australia's benchmark slipped 0.3%.

Plarium is a business unit of Aristocrat's Pixel United and has been most commercially successful with RAID: Shadow Legends, an extremely popular squad-based role-playing game. “This acquisition results in one of the industry's strongest mid-core mobile gaming portfolios in the industry,” said MTG. The combined entity will have over SEK 12 billion in (US $1.1 billion) annual revenue, with adjusted EBITDA above SEK 3 billion.

Aristocrat's Pixel United division started a portfolio review in May that reported declines in several categories. Bookings of RPG, strategy, and action games dropped to A$283.7 million ($186.50 million) in the first half, down from A$296.4 million. On the other hand, Casual game bookings also fell, down to A$97.2 million from A$104.6 million.

Aristocrat will report its annual results for 2024 on November 13, which may shed more light on the financial strategy of the company. The firm has also started a strategic review of another unit in Pixel United, Big Fish Games. Related to restructuring, Aristocrat took a $110 million goodwill impairment on Big Fish.

Analysts at Citi view the sale of Plarium as positive for Aristocrats. According to Reuters, Analysts at Citi noted the shift and said, “While Big Fish remains to be divested, the Plarium sale addresses a key bearish concern due to below-consensus fiscal 2025 digital forecasts, which they said they would review following Aristocrat's results.”

Another massive deal in the direction of a strategy change for Aristocrat to focus on real-money gaming while reducing mobile gaming footprint.