Devolver Digital, the independent games publisher known for titles such as "Hotline Miami," "The Talos Principle," and "Baby Steps," has announced its intention to withdraw from the London Stock Exchange and revert to private company status. This move comes after a dramatic 95.3 percent decline in its share price since its initial public offering in 2021, when it was valued at approximately $950 million. Currently, the company's shares are valued at around $44.6 million.
In a statement to investors, Devolver Digital explained that the decision is a response to the significant disruption and volatility that has characterized the global video games industry in recent years. The company highlighted widespread layoffs, platform rationalization, and substantial impairments across the sector as contributing factors. Devolver itself has faced operational and market headwinds, including impairments on underperforming titles within an increasingly competitive and unpredictable market environment.
As a publicly traded entity, Devolver stated it has grappled with the challenge of meeting market expectations for growth despite these difficult conditions. The company believes this has led to a valuation disconnect that fails to acknowledge the long-term revenue potential inherent in the video games business. By returning to private ownership, Devolver anticipates saving approximately $1.6 million annually.
The publisher intends to initiate a tender offer for up to $5.0 million in cash to be returned to shareholders, subject to their approval. Devolver suggested that its current share price, which reportedly dropped to just 7.15 pence ($0.10) overnight following the announcement, does not accurately reflect the company's intrinsic value. The company previously went public following the significant success of "Fall Guys" in 2020 and the acquisition of its developer, Mediatonic, by Epic Games in March 2021, a period that may have influenced earlier financial decisions.
Devolver Digital stated that operating as a private company will allow its core teams, particularly in finance, legal, and executive leadership, to concentrate on the long-term health of the business without the pressures and requirements of the public market. The company has indicated that this strategic shift is intended to improve focus and operational efficiency, allowing for a singular dedication to its role as a successful game publisher.