Metaverse player iCandy to acquire 60% of EU HTML5 gaming company

Wed 08 Jun 22, 12:26pm (AEDT)
Office 3 Computers Meeting

Key Points

  • iCandy is seeking to acquire 60% of Flying Sheep Studios (FSS) through a combination of cash and new shares, options
  • 4m new shares to be issued in twelve tranches across three years; FSS management are bound to stay on board into 2025
  • iCandy believes FSS HTML5 capabilities allow it to strategically move into ‘Web 3.0’ applications

Metaverse gaming player iCandy Group (ASX:ICI) has entered into a binding agreement to acquire a 60% shareholding in European game developer Flying Sheep Studios (FSS), a former partner of Dreamworks Animation and Lego Group. 

iCandy Group is to pick up FSS for a total consideration of $3m; FSS will provide the group with an inhouse technology stack of HTML5 capabilities, largely tipped to underpin 'web 3.0.' 

iCandy notes HTML5 applications "revolutionise" video game capabilities, allowing for fast-loading applications on a variety of internet speeds that lesser the operating burden on hosting servers. 

iCandy ultimately wants the tech to lend the group an advantage in the growing metaverse and e-gaming space, and also to extend its reach into the European marketplace, where FSS is headquartered. 

(Source: Flying Sheep) A snapshot of one of the characters from a FSS asset
(Source: Flying Sheep) A snapshot of one of the characters from a FSS asset

What is HTML5?

"[Flying Sheep's] inhouse HTML5 capabilities provide for on time games with...cleaner and neater code as well as reduced load on servers," the company noted. 

"In addition, HTML5 supports rich media elements which enable media material plays and reduce plugin speeds." 

Users of metaverse games based on HTML5 will not be required to install plugins or download large files, which has typically put a burden on the consumer to purchase high-performing (and high-cost) computers and devices.

Who are Flying Sheep Studios?

The European studio has formerly delivered over 200 games to clients (including DreamWorks Animation) and recorded nearly half a million in revenue for the fiscal year ending December 2021. 

Broken down, the $3m consideration sees iCandy passing FSS $1.8m in cash "to subscribe for 37.5% of the enlarged share capital" of FSS.

A further $1.2m consideration in exchange for 22.5% of FSS will be made up of both a further $603,000 cash to the founders of FSS, and, the issuance of 4.6m new fully paid ordinary shares of iCandy worth $603,000 at an issue price of 0.13c. 

iCandy will also give the founders of FSS 500,000 unlisted options. 

The 4 million shares will be issued in 12 tranches over three years. In return, the founders of FSS have signed a binding agreement to continue leading FSS following its acquisition. 

This ensures iCandy is able to tap into the knowledgebase of those who have been onboard throughout the length of its operations. 

The group expects the deal to finalise before the start of Q3 of 2022. At the end of Q1 2022, iCandy reported it sat on $42m in cash.

A look at iCandy's three month charts compared to the tech index (XIJ)
A look at iCandy's three month charts compared to the tech index (XIJ)


Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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