On Thursday, Citi updated its stance on Keywords Studios Plc (KWS:LN) (OTC: KYYWF) shares, raising the price target to GBP24.50 from the previous GBP23.15, while keeping a Neutral rating on the stock. The adjustment follows the company's announcement that it has received a definitive buyout offer at 2450p per share, which is currently recommended to its shareholders.
Keywords Studios, a service provider to the video game industry, has garnered support from several large shareholders for the acquisition proposal. The firm's acceptance of the bid is seen as a strong indicator of the transaction's high likelihood of completion. Citi's analyst has factored in a nearly certain probability of the deal going through, leading to the revised price target.
The proposed acquisition comes at a premium to Keywords Studios' undisturbed share price. The company's recent trading performance has shown some weakening, which has been considered in the context of the transaction. Despite the lower trading activity, the offer price has been deemed attractive enough to gain the endorsement of the company's board.
EQT (ST:EQTAB), the potential acquirer, has expressed its belief that taking Keywords Studios private will better position the company to realize its long-term growth ambitions outside of the public market. This strategic move is aimed at leveraging the private sector's advantages to foster the company's development and expansion.
The raised price target by Citi reflects the anticipated successful completion of the takeover, marking a pivotal moment for Keywords Studios as it potentially transitions into a privately-held entity.
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