Atari Reveals Plans To Fully Acquire Nightdive Studios

Atari will be acquiring Nightdive Studios.

As a brief reminder, this Atari is not the original Atari founded in 1972 by Nolan Bushnell and Ted Dabney. This company was originally known as InfoGrames and it was founded in France in 1983.

I won’t go through the whole history here, but InfoGrames acquired Atari’s trademarks and library when it acquired Hasbro Interactive in 2001. A subsidiary of InfoGrames renamed itself to Atari Inc, but in 2008, InfoGrames fully acquired this subsidiary, to completely change its name to Atari SA.

This Atari has been attempting several non-video game related ventures, including hotels and NFTs, but it does remain a video game publisher. Another studio it had previously owned was Cryptic Studios, who made games like Star Trek Online and Neverwinter.

Nightdive Studios, launched in 2012, and headquartered in Eastern Vancouver, Washington, has made it a specialty of rereleasing classic games, mainly 2000s era shooters, but the way it has done so is somewhat unusual, and maybe the reason Atari became interested in acquiring them.

Nightdive takes the effort to acquire the rights to the games themselves, if at all possible, and if there is a rights holder, they work out the deal to get the game back in circulation. They work also combines part video game preservation, as they deliberately work to recover the original code of the games, or try to recreate them when they can.

If you find this move unusual, there is something you need to know. Wade Rosen, who is Atari’s CEO and chairman, is also a big believer in Nightdive Studios. Wade personally bought 13 % of Nightdive’s stock under his trust, before deciding to have his company buy the whole company.

This move will likely not affect the development of Nightdive’s current projects, but the potential is promising for the studio’s future. With the backing of a major publisher, Nightdive will not only have the money, but also some big business clout, to pursue their future projects.

Many fans will remember that Nightdive tried but failed to acquire the rights to No One Lives Forever. Now that Goldeneye 007 has been rereleased, and they fall under Atari’s name, they might be able to convince the rights holders this time. That’s the kind of potential that this deal brings for Nightdive.

You can read the text of the Atari Nightdive press release below, courtesy of Gematsu.

Agreement Signed to Acquire Nightdive Studios

Led by industry veterans Stephen Kick and Larry Kuperman, Nightdive is a full service development and publishing company with expertise in restoring, optimizing, and publishing classic video games. Nightdive has published over 100 titles and has garnered critical acclaim for their releases of seminal industry and fan-favorite titles including System Shock, DOOM 64, and Quake.

Nightdive’s most recent project is a remastered version of classic first-person shooter game System Shock, which is one of the most-anticipated retro releases of 2023. System Shock is now available for pre-order on Steam, GOG and Epic Games.

A key to the success of Nightdive is their proprietary KEX engine that makes classic games playable on modern hardware and gives the studio the ability to enhance and improve upon the original to meet the expectations of contemporary players. The studio’s reputation and deep industry knowledge have made them a go-to partner for some of the largest names in gaming and media and allowed them to develop a diversified portfolio of titles.

For the fiscal year ended December 2022, Nightdive has reported revenue of approximately US$3.0 million1. The founders own 87% of the Company’s shares while Wade Rosen, Chairman and CEO of Atari, owns a minority stake of 13%.

With this acquisition Atari will enrich its large library of owned IP, be able to leverage Nightdive’s proprietary technology, and utilize Nightdive’s publishing capabilities to support Atari’s retro-focused growth strategy.

This acquisition has been approved unanimously by the disinterested members of the board of Atari, it being specified that Wade Rosen did not participate to the vote.

Wade Rosen, Chairman and CEO of Atari, commented: “Nightdive’s proven expertise and successful track record in commercializing retro IP is well-aligned with Atari’s strategy and I am confident that their combined talent, technology and IP portfolio will contribute to Atari’s future success.”

Stephen Kick and Larry Kuperman, principals of Nightdive commented: “Nightdive and Atari have a long history together and we know that Atari shares our passion for retro games and our focus on producing high-quality new and remastered games that do justice to the original IP. As we look to grow our business and expand our capabilities, we could think of no better long-term partner than Atari.”

Terms and Timing of the Acquisition

The purchase price of Nightdive will consist of (i) an initial consideration of US$10 million payable half in cash and half in Atari shares at the closing of the acquisition (see below) plus (ii) an earn-out of up to US$10 million, payable in cash over the next three years based on the future performance of Nightdive.

It is expected that the acquisition of Nightdive will be completed in April 2023.

Financing of the Acquisition

• The initial consideration will be paid half in cash (for US$5 million) and half in newly issued Atari ordinary shares (for US$5 million). The calculation of the number of Atari shares to be issued will be based on the 20-day volume weighted average price of Atari shares on Euronext Growth prior to the tenth day prior to the closing of the transaction.
• The new Atari shares will be issued by the Company, represented by the board of directors of Atari, through a contribution in kind (apport en nature) of Nightdive shares to Atari acting pursuant to the 18th resolution of Atari’s combined shareholders’ meeting held on September 27, 2022 (the “AGM”) and on the basis of the reports of a court-appointed contribution auditor (commissaire aux apports) on the value of the contribution in kind and the fairness of the exchange ratio5.
• The Company and Irata LLC, a holding company controlled by Wade Rosen (“Irata”), have agreed that Irata intends to provide bridge financing to Atari for the payment of the initial consideration, or $5 million.

Convertible Bonds

The Company intends to issue €30 million in Convertible Bonds through a public offering in France with a priority subscription period (offre au public avec délai de priorite) for all the shareholders of Atari.

• A prospectus in relation to the Convertible Bonds offering will be prepared and subject to the AMF approval;
• The issuance of the Convertible Bonds will occur shortly after the completion of the acquisition;
• The Convertible Bonds will be issued with a priority subscription period for all shareholders for a period of three trading days (that does not result in the creation of negotiable rights) through a public offering in France (only);
• The main shareholder of Atari, Irata LLC, holding 29.2% of the share capital of Atari, has indicated that it intends to subscribe its prorata share and to provide a firm underwriting for a number of Convertible Bonds equal to at least to 75% of the total amount of the offering;
• It is the intent that Irata will undertake contractually and irrevocably vis-à-vis the Company not to convert its Convertible Bonds into Atari shares before at least the 25th of June 2025.

The amount raised through the Convertible Bonds will mainly be used to:

• Reimburse the $5 million bridge financing provided by Irata in the context of the acquisition and finance future potential acquisitions Atari may consider;
• Continued investment in growth initiatives, notably in the development of more than 12 new games expected to be launched in the next 18 months;
• General cash requirements and financial flexibility necessary to pursue the transformation plan;
• Reimburse the shareholder loans granted by Irata6 previously granted in accordance with its support commitment, and accrued interests on these loans.