A Vancouver gaming company (TSX:LEAF) is cementing its rapidly growing presence on the West Coast with the acquisition of a third local competitor over the past year.
Leaf Mobile Inc. (TSX:LEAF) revealed Tuesday it’s entered into a non-binding letter of intent to acquire Truly Social Gaming Vancouver Inc. (TSG) in a deal worth up to $37 million.
Leaf, best known for cannabis-themed mobile games like Cheech & Chong Bud Farm, debuted on the Toronto Stock Exchange last month following the $159-million acquisition of Vancouver’s East Side Games Inc.
That came after Leaf bought out Nanaimo’s LDRLY Games Inc. in April 2020.
The deal with TSG would see Leaf pay $3 million in cash for a 20% ownership stake followed by $4 million in shares for another 20% stake, depending on TSG’s financial performance over two years.
The deal for the first 20% stake for $3 million is expected to close in 90 days.
The final 60% ownership stake would be purchased for $15 million in shares — again, depending on TSG’s performance — within a three-year period.
Another $15 million would be paid out in shares depending on the performance of TSG’s titles over a three-year period.
“The ability to have a certain size and scale provides a definitive … competitive advantage for you in the space. And that's everything from improved costing due to scale across everything from servers to UA [user acquisition] to the ability to draw talent,” Leaf Mobile CEO Darcy Taylor told BIV last month.
He said the rapid expansion plans will make Leaf more competitive both within Canada and globally.
“We're very decentralized, so our studios that we bring into our group are operated locally and are continuing to be led by the founders or the entrepreneurs that were there from the get-go,” Taylor said last month, referring to the East Side Games deal.
Founded in Vancouver in 2015, TSG also has offices in Portland and Minsk.
Its titles include Planet Gold Rush and Gold Mania.
The connection between the latest two companies to come under the Leaf umbrella goes a little deeper: TSG has developed games on the IdleKit platform that East Side Games has published.