Wall Street may finally get over its “Fortnite” addiction.
Epic Games, the creator of the wildly popular shoot-em-up video game, launched a flopping attempt to raise money last month in a deal that would have valued the company nearly 40% higher than what it set for a couple weeks later. The Post has learned.
Earlier this month, Epic announced that it raised $ 2 billion from Sony Group and Kirkbi, the Danish-based holding company for the Lego toy empire, in a deal that valued the company at $ 31.5 billion. That was slightly higher than the $ 28.7 billion that the company was valued at in its previous round of financing in April 2021.
What Epic did not mention, however, is that a few weeks earlier it had been in the early stages of launching a takeover bid through Nasdaq’s private exchange, where the informal price expectation was a valuation of $ 42 billion, a source with direct knowledge of said the situation.
No fixed price was set at the time Epic measured interest from existing investors, including BlackRock, Fidelity Management, T. Rowe Price, hedge fund Appaloosa and private equity giant KKR. But before these investors could examine the most current Epic finances, Epic closed the bidding process, sources said.
This is because Epic’s bankers “went out and heard chickens” from investors after first announcing the possible offer, the source said.
“The offering was getting ready to launch and they put it on pause,” said another source, adding that Epic completed it a week or two before it was scheduled to open its data room.
An Epic spokesman confirmed that the company “has evaluated the partnership with Nasdaq Private Market to allow its employees to engage in private secondary transactions with qualified buyers for some time,” adding that “the initial timeline was postponed until after the announcement. of our capital raising. “
“As with any business moving price a buyer may be willing to pay both up and down. None of these transactions are sponsored or managed by Epic,” the spokesman added in a statement. “We are proud to have recently raised money from investors who share our vision and that Epic’s value continues to grow despite market turmoil.”
A key issue, according to insiders, is a fierce battle with Apple over the iPhone maker’s fees for app developers. Epic sued Apple and Google in 2020 when technology giants launched Fortnite from their app stores after Epic set up its own in-app payment system in an attempt to dodge their huge 30% fee cut.
A federal judge in San Francisco in September ruled largely in Apple’s favor, except that the gaming company could offer its own payment options to customers so they do not have to make purchases through the App Store.
Both sides have appealed the judge’s decision.
“Their profitability has dropped a lot and the path to more growth from here is not clear,” an Epic investor told The Post. “Epic is still very profitable, but its numbers have been declining through their battle with Apple.”
As part of its financing agreement, Epic said it is working with Lego to build a metaverse for children, with Lego investing $ 1 billion in the new $ 2 billion financing round.
Fortnite in 2020 reportedly generated $ 5.1 billion in revenue, which is from its 2018 peak of $ 5.4 billion.