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A trio of acquisitions from Keywords

The software services group has been on a spending spree
May 23, 2017

May has been a busy month for digital game services provider Keywords Studios (KWS). In the past two weeks alone the group spent $11.7m (£9m) on three acquisitions that are all expected to immediately enhance earnings. Broker Numis has therefore raised its earnings expectations for both the current financial year and next, and the shares have continued to plough upward.

IC TIP: Hold at 852p

Acquisitions have been vital to Keywords' growth story in recent years and Red Hot, GameSim and XLoc all look set to add to that. The acquisition of the three companies has been largely funded through the group's net cash, which stood at €8.7m (£7.5m) in December 2016.

Keywords' shares have had an excellent run in the last year and the group's founders and management have locked in some of the profits from that surge. PEQ, the holding company of the founders of the group, has sold 4m shares in the company while and chief executive Andrew Day has sold 500,000 shares, cashing in £33m and £4.1m respectively. Mr Day, who continues to hold 5.9 per cent of Keywords' shares, said the sale would help broaden the group's shareholder register and satisfy institutional demand. PEQ's stake in the company now stands at 7.2 per cent.