Reiterates View that Controlling Shareholder DoubleU Games’ $11.25 per ADS Offer Woefully Undervalues the Company
Believes that the Company is Worth at Least $26.40 per ADS in a Transaction
PORTSMOUTH, N.H., Aug. 17, 2026 (GLOBE NEWSWIRE) -- Four Tree Island Advisory LLC, a top-15 shareholder of DoubleDown Interactive Co., Ltd. (NASDAQ:DDI) (“DDI” or the “Company”) based on public information, today issued the following letter to the special committee of DDI’s Board of Directors (the “Special Committee”) in connection with DoubleU Games Co., Ltd.’s (“DoubleU Games”) proposal to acquire the remaining publicly held ADSs of DDI for $11.25 per ADS.
Members of the Special Committee:
Four Tree Island Advisory LLC is writing as a follow-up to our May 4, 2026 press release in which we called on the Special Committee to reject DoubleU Games’ $11.25 per ADS takeover proposal because we believed the proposed transaction materially undervalued DDI and failed to reflect both the Company’s current operating performance and its forward earnings power.
As the Special Committee continues to review the proposal in consultation with its legal and financial advisors, we felt it was necessary to highlight the following. Since DoubleU Games initially announced its proposal—before DDI reported first-quarter results—DDI has reported two quarters of what we believe to be exceptionally strong operating and financial performance. The Company’s progress reinforces our view that the original proposal materially undervalues DDI and that any revised proposal must reflect the Company’s improved earnings power, cash generation, and strategic value.
Among the relevant developments, the Company’s:
- Trailing-twelve-month revenue has increased approximately 5.6% from the level reported as of year-end 2025.
- Trailing-twelve-month adjusted EBITDA has increased approximately 9.3% since year-end 2025.
- Cash per ADS has increased from $9.89 at year-end 2025 to approximately $11.18.
- Direct-to-consumer revenue is materially ahead of prior Company expectations and is now expected to represent 55% or more of revenue by year-end.
- Trajectory has it positioned to generate more than $165 million of adjusted EBITDA in 2026 and to end the year with cash per ADS exceeding $12.10.
These developments are especially important in light of the valuation implied by Playtika Holding Corp. (“Playtika”), which we view as DDI’s most relevant publicly traded comparable.
While DDI’s financial position and earnings trajectory have strengthened, Playtika has faced a materially more difficult operating and capital-structure backdrop. Since year-end 2025, Playtika’s trailing-twelve-month EBITDA has declined, while its net-debt position has increased by approximately 24%. Playtika also faces substantial contingent obligations associated with its SuperPlay acquisition, including what may be more than $370 million of additional earnout payments, alongside a highly leveraged balance sheet and limited liquidity relative to those obligations.
Playtika has further announced that it is evaluating strategic alternatives. In our view, that announcement likely reflects, at least in part, the pressures created by its leverage, contingent commitments, and operating challenges. Nevertheless, Playtika trades at an enterprise-value multiple of approximately 4.3x trailing-twelve-month adjusted EBITDA.
Additionally, Playtika stated in connection with its second-quarter earnings release that it intends to materially reduce marketing expenditures to support free-cash-flow generation. While that decision may be financially prudent for Playtika, it could also reduce its revenue-growth capacity and improve the competitive environment for DDI during the second half of 2026.
Fair-Value Framework
DoubleU Games stated on its August 12, 2026 second-quarter earnings call that it expects to submit additional SEC documentation following the third-quarter and that it intends to pursue taking DDI private during the fourth quarter.
In light of that timetable, the Special Committee should evaluate any proposal based on DDI’s prospective 2026 earnings power and anticipated year-end net-cash position—not on historical figures that predate DDI’s recent operational progress.
Accordingly, Four Tree Island Advisory respectfully submits that:
- Under no circumstances should the Special Committee approve a transaction at an enterprise-value multiple below the approximately 4.3x trailing-twelve-month adjusted EBITDA multiple at which Playtika trades.
- The appropriate valuation framework should incorporate DDI’s expected 2026 adjusted EBITDA of at least $165 million and its anticipated year-end net-cash position of approximately $570 million.
- Applying a 4.3x multiple to expected 2026 adjusted EBITDA, together with the expected year-end net cash, supports an equity value of approximately $26.40 per ADS.
We emphasize that this valuation represents a conservative floor—not a stretch outcome. It would still value DDI at a modest multiple despite its superior balance sheet, growing EBITDA, increasing cash balance, attractive direct-to-consumer growth profile, and expected competitive benefits from Playtika’s reduced marketing expenditure.
It is also notable that DDI’s prior acquisitions of WHOW Games and SuprNation were completed at substantially higher enterprise-value-to-EBITDA multiples. Further, if Playtika were not constrained by leverage, contingent obligations, and deteriorating EBITDA trends, we believe it would reasonably trade at an enterprise-value multiple closer to 5.0x to 6.0x adjusted EBITDA. Acquiring a better-positioned DDI at only 4.3x expected 2026 adjusted EBITDA would therefore represent an exceptionally attractive transaction for DoubleU Games.
We also note that B. Riley recently increased its DDI price target to $24 per ADS, based on its stated valuation framework of approximately 4.0x EBITDA. That analysis independently supports the view that a meaningful increase from DoubleU Games’ initial proposal is warranted.
If DoubleU Games Refuses to Offer Fair Value
If DoubleU Games remains unwilling to offer minority shareholders value materially in excess of DDI’s cash per ADS—effectively offering minority holders only their proportionate share of the Company’s cash balance while ascribing little or no value to DDI’s highly cash-generative operating business—the Special Committee should carefully consider all available alternatives.
One such alternative would be for DDI to offer to repurchase DoubleU Games’ ownership interest in DDI on substantially the same economic terms that DoubleU Games contends are “fair” for minority shareholders.
For example, if DoubleU Games was willing to sell its DDI stake for consideration representing only its pro rata share of DDI’s cash balance, DoubleU Games could receive approximately $372 million for its shares. Minority shareholders would then own DDI outright, with approximately $182 million of cash remaining on the balance sheet and expected 2026 adjusted EBITDA of more than $165 million—or more than $10 per ADS.
Under that scenario, minority shareholders would retain ownership of a profitable, well-capitalized business that could plausibly command a materially higher valuation in a strategic transaction. At 4.0x EBITDA per ADS plus approximately $11 per ADS of cash, the implied value could approach $51 per ADS.
The point is straightforward: if a valuation is truly fair for minority shareholders, it should also be fair for DoubleU Games. If DoubleU Games would not accept such consideration for its own shares, the Special Committee should be reluctant to impose it on DDI’s minority shareholders.
We appreciate the Special Committee’s diligence and urge it to ensure that any transaction reflects DDI’s demonstrated operating momentum, substantial net-cash position, and standalone and strategic value.
Kind regards,
Four Tree Island Advisory LLC
Contact
Four Tree Island Advisory LLC
info@fourtreeislandadvisory.com
(603) 427-8053
