Acquisition
July 23 2009 - 2:00AM
UK Regulatory
TIDMPRTY
RNS Number : 1335W
PartyGaming Plc
23 July 2009
23 July 2009
PartyGaming Plc
("PartyGaming" or "the Company")
Online Bingo Acquisition
Highlights
* PartyGaming has acquired the entire issued share capital of Cashcade Limited
("Cashcade") for an initial payment of GBP71.9m in cash with up to a further
GBP24.0m in cash contingent on, inter alia, future profit performance. Cashcade
has been acquired on a debt-free/cash-free basis
* Cashcade owns some of the UK's leading online bingo websites including Foxy
Bingo, Think Bingo and Bingo Scotland as well as casino sites such as
GetMinted and Foxy Flutter
* The acquisition is expected to be earnings enhancing, pre-amortisation of
intangibles, in 2009
* In the year ended 31 December 2008, Cashcade generated net revenue of GBP44.9m
(2007: GBP28.5m) and earnings before interest, tax, depreciation and
amortisation ("EBITDA") of GBP12.2m (2007: GBP4.9m) implying an acquisition
multiple of 5.9 times 2008 EBITDA
* The acquisition is being financed from existing cash resources
* Cashcade's skills and experience will boost PartyGaming's existing bingo
activities
Commenting on today's announcement, Jim Ryan, PartyGaming Chief Executive
Officer, said:
"Cashcade provides us with an excellent platform to build a meaningful share of
the $1.5 billion global online bingo market. Our M&A objective is to acquire
companies that can put us into a top three position in each of our four product
verticals and deliver substantial revenue and cost synergies. Our longer-term
strategic objective is to become the market-leader in online poker, casino,
sports and bingo."
Patrick Southon, Cashcade's Managing Director, said:
"This is a very exciting day for Cashcade and we are delighted to join the
PartyGaming organisation. We believe there is a substantial opportunity to
leverage our existing business now that we are part of the world's leading
online gaming company."
Contacts:
+--------------------------------------------+------------------------------+
| PartyGaming Plc | +44 (0) 207 337 0100 |
+--------------------------------------------+------------------------------+
| Peter Reynolds, Group Director of Corporate Affairs |
+---------------------------------------------------------------------------+
| John Shepherd, Director of Corporate | |
| Communications | |
+--------------------------------------------+------------------------------+
Conference call: 23 July 2009
For analysts and investors there will be an opportunity to put questions to Jim
Ryan, Chief Executive Officer, and Martin Weigold, Group Finance Director, by
way of a conference call later today. The details of the call are as follows:
+------------------------+--------------------------------------+
| 09.20 am BST | Please call +44 (0) 20 8609 3822 |
| | (UK) |
+------------------------+--------------------------------------+
| 09.30 am BST | Conference call starts |
+------------------------+--------------------------------------+
7 Day Playback
+-------------------------+--------------------------+
| Access Number | +44(0)20 8609 0289 |
+-------------------------+--------------------------+
| Conference Reference | 268759# |
+-------------------------+--------------------------+
Acquisition of Cashcade Limited ("Cashcade")
PartyGaming, the world's leading listed online gaming company, announces the
acquisition of 100% of the issued and to be issued share capital of Cashcade
("the Acquisition") for a cash consideration of GBP71.9m with deferred
consideration of up to GBP24.0m in cash depending, inter alia, upon future
profit performance. The Acquisition, which has been made on a debt-free/cash
free basis, is in line with the Group's stated strategy and will position the
Group as a major player in the $1.5 billion per annum global online bingo
market.
About Cashcade
Cashcade, which has been advised by Jefferies, is a leading UK-based online
marketing business specialising in bingo and casino games. As at 31 January
2009, Cashcade's websites had approximately 2.2 million registered players and
over 460,000 cumulative active players. Its core owned bingo websites include
Foxy Bingo, Think Bingo, Cheeky Bingo and Bingo Scotland. Core owned casino
websites include GetMinted and Foxy Flutter.Cashcade also supports the branded
bingo and casino websites of three media organisations - Trinity Mirror plc, STV
Group plc and Emap plc.
Under UK GAAP in the year ended 31 December 2008, Cashcade generated net revenue
of GBP44.9m (2007: GBP28.5m) and EBITDA of GBP12.2m (2007: GBP4.9m). As at 31
December 2008, Cashcade had gross assets of GBP21.7m.
Led by Patrick Southon, Managing Director, and Simon Collins, Commercial
Director, who together founded the business and will join the PartyGaming Group,
Cashcade's primary focus has been branding, marketing and promoting the online
bingo and casino websites, providing content and offering customer support. The
software for Cashcade's owned and managed online gaming sites is provided by 888
Holdings and WagerWorks.
Terms of acquisition
The initial consideration payable by PartyGaming, through a designated
subsidiary, is GBP71.9m. This was satisfied by a cash payment funded from the
Group's existing cash resources. Cashcade has been acquired on a
debt-free/cash-free basis implying an acquisition multiple of 5.9 times 2008
EBITDA.
Deferred consideration of up to GBP24.0m in cash will become payable if certain
profit targets are met as follows:
* a further GBP15.0m will become payable to Cashcade shareholders in March 2010 if
the EBITDA of Cashcade in the 2009 calendar year equals or exceeds GBP15.0m.
Failure to meet the GBP15.0m target will result in a downwards adjustment in the
amount payable on a straight-line basis with no payment being made if EBITDA in
2009 is equal to or less than GBP12.0m.
* a further GBP9.0m will become payable in March 2011 if the EBITDA of Cashcade in
the 2010 calendar year equals or exceeds GBP19.0m. Failure to meet the GBP19.0m
target will result in a downwards adjustment in the amount payable on a
straight-line basis with no payment being made if EBITDA in 2010 is equal to or
less than GBP15.0m.
It is expected that the Acquisition will be earnings enhancing in the first year
before associated amortisation of intangibles.
About PartyGaming Plc
PartyGaming Plc is the world's leading listed online gaming company. The Group
is a constituent of the FTSE 250 share index with its shares listed on The
London Stock Exchange under the ticker: PRTY. In the year to 31 December 2008,
PartyGaming's continuing operations generated revenues of $472.9m and Clean
EBITDA of $144.2m. PartyGaming's principal brands are PartyPoker.com, one of the
world's largest online poker rooms, EmpirePoker.com, PartyCasino.com,
PartyBingo.com, PartyGammon.com, PartyBets.com, PartyMarkets.com and
Gamebookers.com. None of the Group's sites accept real money customers located
in the US. PartyGaming is regulated and licensed by the Government of Gibraltar
and by the Alderney Gambling Control Commission and is certified by GamCare as a
responsible gaming operator. For more information, please visit
www.partygaming.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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