Keywords Studios has expanded with the acquisition of video game development company Gobo in a deal worth up to £26 million.

The AIM-listed group has taken over Studio Gobo Ltd and Electric Square Ltd from the founders and other members of the management team.

Gobo provides game development services to video game developers and publishers around the world from its Studio Gobo and Electric Square studios based across three studio locations in Brighton and Hove.

"The acquisition further expands the number of the world's leading game companies who use our development services," said Andrew Day, CEO of Keywords Studios.

He added: "By significantly enhancing our game development services in both scale and expertise, these studios together with recently acquired Snowed In, Sperasoft, d3t and GameSim help position Keywords as a go to game development partner and give us ever greater visibility of games in the pipeline, at the outset of their development."

Founded in 2011 by game industry veterans, Gobo employs 170 software engineers, artists, animators, game designers, quality assurance testers and producers. Gobo works with game developers and publishers in a number of different operational models to deliver its services. 

Over the years, Gobo has worked on top games franchises such as Disney Infinity, Ubisoft's For Honor, and Microsoft's newest racing game, Miami Street.

Gobo's revenue has grown quickly from £6.2 million for the year ended 30 September 2017 to an estimated £11.6m for the 12 months ending 31 July 2018.

Tony Beckwith, CEO of Gobo, added: "As we look to build upon our strong foundations, Keywords leading position in the video games industry, its breadth of services and its geographical reach will provide us with a strong and broader platform from which to deliver our ambitious growth plans.

"We also look forward to working collaboratively with other members of the Group in offering wider capabilities to all our clients."

Keywords Studios is paying a total sum of up to £26 million, including an initial cash amount of £10.5 million and 254,529 new ordinary shares in Keywords, which will be issued on the anniversary of completion and will then be subject to orderly market provisions for a further 12 months.

The remaining £11 million will be paid in a mix of cash and shares, depending on Gobo meeting certain earnings targets in the 12-month period after the deal.