23/01/2018 |

Mail.ru Group plunges into e-sports

ESForce

Mail.ru Group announced the purchase of almost for $ 120 million largest in Russia and Eastern Europe eSports e-business holding company Anton Cherepennikov and Highland Falls Investment. For the Mail.ru Group, the deal bears an obvious synergy, taking into account the company’s leading positions in Russia in social networks and in the game direction.

Mail.ru Group announced the signing of an agreement on the purchase of 100% ESForce, follows from a message on the London Stock Exchange, where the shares of the Russian Internet company are circulating. The agreement was signed on January 19. It is expected that the transaction will be closed in the first quarter of 2018 after its approval by the regulatory authorities.

The amount of the transaction for which Mail.ru Group buys business from Anton Cherepennikov and Highland Falls Investment will be about $ 100 million less debt now plus a subsequent payment (it will be linked to a number of specific financial and operational indicators). Probably, it will amount to about $ 20 million. Mail.ru Group further consolidates the results of ESForce in its reporting.

The eSports market continues to show very rapid growth: according to the estimates of Superdata, which are presented in the message, in 2018 the world market will be about $ 1.6 billion, and the user base will grow to about 300 million people. ESForce is the largest in Russia and Eastern Europe. Over the past few years, the company has built a full ecosystem in this segment. Among its assets are two cybersport clubs – Virtus Pro and SK (258 gold, 190 silver and 173 bronze medals at international tournaments), a number of tournaments in Dota 2 and CS: Go, 14 websites, 209 groups in social networks and video production studios that create live broadcasts that attract more than 82 million unique users annually, Yota Arena in Moscow, trading and analytical platforms for CS: GO and Dota 2 players, eSports Fragstore merchandising merchant in 20 countries (12 in Europe) .

According to Boris Dobrodeyev, Director General of Mail.ru Group, which are quoted in the message, the world e-sports market continues to grow at an incredibly high rate: according to some forecasts, over the next decade it will overtake the traditional sports market. “The team that has built this business will remain with the company in its entirety. The new acquisition of Mail.ru Group obviously fits into the strategy, we will use our advantage in social networks and the game area to make the success of ESForce even more impressive, he calculates. “This purchase fits perfectly into our strategy and contains a whole range of synergies with existing business “.

In 2017, ESForce had 116 million users, 440 million sessions and more than 120 million hours of viewed online content through streaming platforms. It is expected that revenue for 2017 will be about $ 19 million (approximately 150% higher than a year earlier). “To stimulate strong business growth, over the past few years, the company invested about $ 60 million in investment,” the report said. In 2017, ESForce had a negative EBITDA of $ 15 million, the company acknowledges. At the same time, Mail.ru Group expects that the revenue growth of ESForce will be 80-100% in 2018, and the business itself will achieve profitability at the end of this year.

Author: Roman Rozhkov

Article in Russian: Kommersant

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