THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, SOUTH AFRICA OR IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW OR REGULATION.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN TEAM17 GROUP PLC OR ANY OTHER ENTITY IN ANY SUCH JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION (EU NO. 596/2014) AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED FROM TIME TO TIME) ("UK MAR").

13 January 2022

For immediate release

Team17 Group plc

("Team17", the "Group" or the "Company")

€100m acquisition of astragon

Team17, a global games label, creative partner and developer of independent ("indie") premium video games and publisher, creative partner and developer of educational entertainment ("edutainment") apps for children, is pleased to announce that it has entered into a definitive agreement to acquire astragon Entertainment GmbH ("astragon"), a well-known developer, publisher and distributor of sophisticated 'working' simulation games based in Germany, for a maximum cash consideration of €100 million (£83 million¹) (the "Acquisition").

The initial cash consideration payable is €75 million (£63 million¹), with a further consideration of up to €25 million (£20 million¹) payable in cash on the delivery of EBITDA performance targets for the financial years ending December 2021 and 2022. In addition, a Management Incentive Plan of up to €7.5 million (£6.25 million¹) has been established for the existing management and employees of astragon linked to the delivery of EBITDA performance targets.

The Acquisition is not subject to regulatory approval and is expected to complete mid-January 2022. The vendors of astragon are André Franzmann, Dirk Walner and FFF - Beteiligungs GmbH. 

The Acquisition will be funded from the proceeds of a proposed placing of new ordinary shares in the Company to raise approximately £80 million (before expenses) (the "Placing"). The Placing is being conducted through an accelerated book building process which will be launched immediately following the release of a separate announcement relating to the Placing. Joh. Berenberg, Gossler & Co. KG ("Berenberg") is acting as sole global co-ordinator and sole bookrunner (the "Sole Global Co-ordinator", the "Sole Bookrunner", or the "Bank") in connection with the Placing.

¹ EUR:GBP exchange rate of 1.20 as of 12 January 2022 (Bloomberg), figures are rounded

Acquisition rationale & highlights

The Acquisition of astragon is in line with the Group's existing growth strategy and, in the opinion of the directors of the Company ("Directors"), is expected to bring a number of benefits to the Group, including:

·    Enables Team17 to enter a new and complementary simulation game category, further strengthening Team17's position as a provider of games entertainment to a broader audience.

·    Brings a strong back catalogue of evergreen owned franchises and IP with more than 20 games developed over the last 10 years and a solid pipeline of products in development.

·    Supported by Team17's strategic partnerships, combined with consistent growth and commercialisation experience, astragon has the potential to build on its existing foundations and accelerate its current growth trajectory to achieve its ambition to become the global number one simulation portfolio brand for gaming.

·  The Acquisition accelerates Team17's entry into content offering to consumers in the high-quality simulation space which the Group believes the demand for this kind of non-violent and cooperative entertainment games has accelerated as a result of the COVID-19 pandemic.

·    The Acquisition brings a specialist talented team to Team17, who will continue to operate and function as an independent vertical within the enlarged Group whilst also delivering cross collaboration opportunities given the core focus on creating and publishing games within their respective genre/fields.

·    The combination of both Team17 and astragon creates exciting commercial opportunities with a number of brands from other industries and media partners.

·    astragon is profitable and has demonstrated consistent profit growth of 45% EBITDA CAGR from 2017A - 2020A driven by strong organic revenue growth of 18% CAGR from 2017A - 2020A, which was generated from diversified revenue streams from its expertise in development, publishing and licensing. Audited results show astragon generated c. €26 million of revenue and €5.7 million of EBITDA for the year ended 31 December 2020 and had audited net assets of approximately €13.8 million as at 31 December 2020.

·    The Acquisition is expected to generate mid to high single digit accretion to EPS, based on the proposed funding structure.

Information on astragon

Founded in 1998 and headquartered in Duesseldorf, Germany, astragon is a leading developer, publisher and distributor of sophisticated 'working' simulation games, targeting a broad audience from young enthusiasts to technical experts and casual relaxed gamers.

astragon's well known IPs such as Firefighting Simulator, Police Simulator, Bus Simulator and Construction Simulator focus on non-violent cooperative gameplay with very detailed, technical, and realistic environments across PC, Console and Mobile gameplay, for millions of enthusiastic customers.

Companies with leading brands from other industries work closely with astragon, which undertakes the translation of brand values into engaging simulation game products for the digital domain.

The team at astragon has significant experience and relationships with some of the world's leading vehicle brand manufacturers, games, and media companies. The entire team will join Team17 as part of the Acquisition and the enlarged Group will continue to leverage their knowledge and expertise to drive future growth.

astragon has historically demonstrated its ability to broaden their audience with regular updates and content, new features, and the introduction of new products and IPs. This momentum is due to continue into 2022 and beyond, with a solid pipeline of new product launches planned along with ongoing discussions with new key partners.

Debbie Bestwick MBE, CEO of Team17, commented: 

"We are delighted to welcome the astragon team into Team17, and believe we are joining forces with one of the leading experts in the simulation games space. They have decades of game creation and publishing experience, have built an outstanding and highly devoted community and have developed an outstanding portfolio of owned IP across this genre."

"At Team17, we have always strived to build, develop and publish great content for the widest audience possible.  With the addition of StoryToys and the expansion of our Games Label, which includes the recently acquired USA based 'The Label' and now astragon, we have significantly expanded Team17's appeal to the widest ever cross section of gamers, spanning multiple genres and age groups."

"We look forward to working closely with astragon's joint CEOs Julia and Tim and their whole team who share our ambitions to grow their own IP titles on the path to developing a leading global simulation portfolio brand as part of the Team17 family."

Julia Pfiffer and Tim Schmitz, CEOs of astragon, commented:

"Team17 is the perfect home for astragon as we enter into this exciting new chapter. From the first day we felt that Team17 shares the same vision for our games and understands our target group. Our goal is to become the number one brand in the field of 'working' simulation games. Collaborating with Team17 will enable and help astragon to evolve and focus on this strategy. We look forward to the possibilities that are opened up by working with what we believe to be a great partner to deliver our ambitions."

Enquiries:

About Team17 Group plc

Team17 Group plc is a global provider of games entertainment to a broad audience. It has two main verticals - a games entertainment label and creative partner for indie developers, and a leading developer of educational apps, targeting children under the age of eight.

Games label and creative partner

Team17 is a games entertainment label and creative partner for independent ("indie") developers, focused on the premium, rather than free to play market, and creating games for the PC, console, mobile and tablet gaming markets.

Alongside developing the Company's own games in house ("first party IP"), Team17 also partners with independent developers across the globe to add value to their games in all areas of development and production and in bringing them to market across multiple platforms for fixed percentage royalties ("third party IP").

Since foundation in 1990, the Company has launched over 100 games, including the iconic Worms, Overcooked! and Escapists franchises, along with many more including;  Yooka-Laylee, Yoku's Island Express, My Time at Portia, Hell Let Loose, Blasphemous, Golf With Your Friends, Neon Abyss and Moving Out making Team17 one of the most prolific developers and diverse partners of games for the indie market.

About astragon Entertainment GmbH

Founded in 1998, astragon Entertainment GmbH is a leading German games developer, publisher and distributor of sophisticated 'working' simulation games, focusing on non-violent cooperative gameplay with very detailed, technical, and realistic environments.

astragon's internationally well-known IPs include Construction Simulator, Bus Simulator, Police Simulator: Patrol Officers and Firefighting Simulator. The distribution of high-quality licensed and distribution products such as Farming Simulator and SnowRunner complete its attractive product range. astragon games are available world-wide on many different platforms such as consoles, smartphones, tablets, and PC.

Visit www.team17.com for more information

The person arranging release of this announcement on behalf of Team17 is Richard Almond, Company Secretary.

IMPORTANT NOTICES

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM ANY PART OF AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE, ANY SECURITIES IN THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES")), AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, SOUTH AFRICA, OR ANY OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF SUCH JURISDICTIONS. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN ANY JURISDICTION.

This Announcement is not for public release, publication, distribution or forwarding, in whole or in part, directly or indirectly, in or into Australia, Canada, New Zealand, South Africa, Japan or any other jurisdiction in which such release, publication, distribution or forwarding would be unlawful.

THIS ANNOUNCEMENT IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA.  THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE OR SUBSCRIPTION INTO THE UNITED STATES.  THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION.  NO PUBLIC OFFERING IS BEING MADE IN THE UNITED STATES.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any other jurisdiction should inform themselves about, and observe, any applicable requirements. This announcement has been prepared for the purposes of complying with the AIM Rules for Companies and UK MAR and the information disclosed may not be the same as that which would have been prepared in accordance with the laws and regulation of any jurisdiction outside of England.

Berenberg, which is authorised and regulated by the German Federal Financial Supervisory Authority and in the United Kingdom is deemed authorised under the Temporary Permissions Regime and is subject to limited regulation by the FCA, is acting exclusively for the Company and will not be acting for any other person and will not be responsible to any person other than the Company for providing the protections afforded to clients of Berenberg or for advising any other person in respect of the matters referred to in this Announcement.

This Announcement contains inside information for the purposes of UK MAR. Market soundings, as defined in UK MAR, were taken in respect of the Placing, with the result that certain persons became aware of inside information relating to the Company and its securities, as permitted by UK MAR. That inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

This Announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this Announcement and include statements regarding the Directors' intentions, beliefs or current expectations concerning, amongst other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which the Group operates. By their very nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements, including, without limitation: conditions in the public markets; the market position of the Group; the earnings, financial position, cash flows, return on capital and operating margins of the Group; the anticipated investments and capital expenditures of the Group; changing business or other market conditions; changes in political or tax regimes, exchange rates and clients; changes in governmental policies, and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this Announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under the AIM Rules, UK MAR or other applicable legislation or regulation, neither the Company nor Berenberg undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should therefore not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement.

Certain data in this Announcement, including financial, statistical and operating information, has been rounded.