One of the world's largest online games companies, Miniclip, has hired advisers to find a buyer after previous attempts to sell it fell through, according to several sources familiar with the firm.
Miniclip is hoping to fetch up to $400 million and could draw interest from "Candy Crush Saga" maker King Digital Entertainment (KING.N), said the sources who declined to be named because the matter is confidential.
It founders had previously been in talks to sell to Walt Disney Co. (DIS.N) and "Farmville" creator Zynga (ZNGA.O), but no deal was struck, the sources added.
Rothschild is advising Miniclip on the latest sale process, one of the sources said.
Representatives of Miniclip, Disney and King Digital were not available to comment. Spokesmen for Zynga and Rothschild declined to comment.
Founded in 2001 by British-born Rob Small and Tihan Presbie, Miniclip has grown from a video clip site to become popular among mobile users with its mass-market multiplayer game "8 Ball Pool".
The company, which Small and Presbie have funded without external investors, has annual core earnings of around $15 million, meaning its target valuation would be more than 20 times core earnings, according to the sources.
The global market for so-called casual games - online or mobile games targeting a mass audience - is estimated to grow 4 percent to $7.6 billion in revenue this year and attract nearly 1.3 billion gamers, according to market researcher NewZoo.
But appetite among investors for casual games companies is unpredictable, with many wary of an industry where the popularity of apps can be short-lived and firms can struggle to make money from a strategy that gives games away for free, while charging for in-game purchases and online advertising.
Zynga lost about 25 percent of its users in one quarter last year after its games plunged in popularity.
Shares in King Digital fell as much as 15 percent in their first day of trading in March after a $7.1 billion initial public offering, before recovering somewhat.
"FICKLE INDUSTRY"
"The gaming industry is fickle and Miniclip has lost some appeal," said one of the sources who pointed to its use of older, Flash technology. "But a number of gaming companies who like simple little games capable to work on mobile platforms will consider bidding."
These could include large industry players, particularly gaming and entertainment groups and possibly toymakers such as Hasbro (HAS.O) in the United States, another source said.
Miniclip ranks No. 12 among online game sites, according to measurement firm SimilarWeb. It had an estimated 50 million visitors in July, down from a six-month high of 64 million in March.
Headquartered in Switzerland, with more than 140 employees worldwide, the company has published over 1,000 games on its website, with an average of two new releases every week, and has more than 45 mobile games.
The firm has been profitable since its inception, said the second source.
It generates the bulk of its revenues from online advertising, sales of subscriptions and virtual goods purchased by users playing its games. It derives much of its traffic throughGoogle, where it ranks No. 1 in a search for "games" in many regions.
Its founders were hoping to strike a deal with Walt Disney several years ago, but negotiations stumbled over personality and cultural clashes, the second source said.
The company resumed its efforts to find a new owner last year and received "serious, strong offers", including from Zynga, despite an ongoing transition from online to mobile devices which was difficult to price, the source said.
But the timing for a deal was not right, partly because of a scandal in Japan over free games sites, which regulators put under investigation following reports they encouraged children to spend too much on in-game purchases, the source added.
Join the Conversation