‘Fortnite’ Maker Epic Games Made Failed Funding Bid Ahead of $2 Billion Fundraising
Wall Street could finally overcome its addiction to “Fortnite”.
Epic Games, the maker of the wildly popular shoot-em-up video game, last month launched a failed attempt to raise funds in a deal that would have valued the company nearly 40% more than what it she had concluded a few weeks later, La Poste learned.
Earlier this month, Epic announced it had raised $2 billion from Sony Group and Kirkbi, the Danish holding company of the Lego toy empire, in a deal valuing the company at 31.5. billions of dollars. That was slightly higher than the $28.7 billion the company was valued at in its previous funding round in April 2021.
What Epic failed to mention, however, is that a few weeks earlier it was in the early stages of launching a tender offer through the private Nasdaq exchange in which the informal price expectation of Epic employees selling their stock was $42 billion. assessment, said a source with direct knowledge of the situation.
No firm price was set at the time, as Epic was gauging interest from existing investors, including BlackRock, Fidelity Management, T. Rowe Price, hedge fund Appaloosa and private equity giant KKR. But before those investors could review Epic’s most recent financials, Epic ended the bidding process, sources said.
That’s because Epic’s bankers “went out and heard crickets” from investors after initially announcing the possible tender, the source said.
“The tender was getting ready to go out and they put it on hold,” a second source said, adding that Epic completed it a week or two before its scheduled data room opening.
An Epic spokesperson confirmed that the company “has been evaluating a partnership with the Nasdaq Private Market to provide its employees with the ability to engage in private secondary transactions with qualified buyers for some time,” adding that ” the initial schedule has been postponed until after the announcement of our capital increase.
“As with any business, the price a buyer may be willing to pay goes up and down. None of these transactions are sponsored or managed by Epic,” the spokesperson added in a statement. “We are proud to have recently raised funds from investors who share our vision, and that the value of Epic has continued to grow despite market turbulence.”
A key issue, insiders say, is a deadly battle with Apple over the iPhone maker’s fees for app developers. Epic sued Apple and Google in 2020 when the tech giants booted Fortnite from their app stores after Epic implemented its own in-app payment system in a bid to dodge their heavy cut 30% of fees.
In September, a federal judge in San Francisco ruled largely in favor of Apple, except the gaming company could offer its own payment options to customers so they wouldn’t have to make purchases through the app. Store.
Both parties appealed the judge’s decision.
“Their profitability has dropped a lot and the path to more growth from here is unclear,” an Epic investor told The Post. “Epic is still very profitable, but its numbers have been declining throughout their battle with Apple.”
As part of its funding deal, Epic said it was working with Lego on building a metaverse for kids, with Lego investing $1 billion in the new $2 billion funding round.
Fortnite in 2020 reportedly generated $5.1 billion in revenue, which is below its 2018 high of $5.4 billion.