16th of February 2010 Author: Ava Jackuard
Bingo specialist could have an important role to play in software provider's plans
Online gambling software provider Playtech plc has added a powerful online bingo arrow to its quiver in acquiring the popular bingo specialist provider Virtue Fusion Alderney, widening its capabilities and improving its chances of prospering in opening markets like France.
Summarising the acquisition, Playtech announced:
* The initial consideration is GBP 29 million (Euro 33.4 million), subject to agreed working capital adjustments, and is to be funded from Playtech's existing cash resources.
* There is provision for an additional earnout payment of up to GBP 7 million (Euro 8.1 million) payable in the first quarter of 2011 based on adjusted EBIT performance in 2010.
* Playtech claims that the acquisition "transforms it into the market leader in bingo", complementing its leading position in poker and casino, and as content provider.
* The deal substantially enhances bingo network player liquidity, and has additional cross-selling opportunities.
* It adds a suite of leading brands in Virtue Fusion's bingo stable to Playtech's growing list of licensees.
* It is expected that the transaction will be earnings accretive in 2010
The Playtech statement advises that in the 12 months to 31 December 2009, the financial performance attributable to the assets being acquired in the Virtue Fusion takeover comprised turnover of GBP 12.3 million (2008: GBP 8.1 million) and adjusted EBITDA of GBP 3.8 million (2008: GBP 2.3 million).
These figures are based on the unaudited consolidated accounts of Virtue Fusion's group, and reflect the fact that bingo has been one of the fastest growing segments in online gaming in 2009.
Virtue Fusion was founded in 1999 and has developed into one of the most liquid bingo networks in the business, with peak traffic of more than 6 000 concurrent players. In addition to its core UK market, Virtue Fusion has a growing international presence in other European countries and has more than 20 licensees including well known brands such as Mecca, William Hill, Ladbrokes, Virgin, Sky, Bet365, Paddy Power and Crown Bingo.
Virtue Fusion offers both an integrated and a turnkey solution to its licensees. Operators can join the network or choose to have an end-to-end "white label" bingo solution. All of the bingo products are multi-currency and multi-language.
The founders and key personnel of Virtue Fusion have contracted to remain with the business for a minimum of two years.
For Playtech, the acquisition significantly enhances its own bingo offering, brings new licensees and enhances its relationships with a number of existing licensees. It also positions Playtech as the leading supplier in all of the key product segments in the online gaming industry, with very substantial liquidity in each of its player networks.
By linking the operator's bingo rooms across the network, Virtue Fusion can facilitate more frequent games being offered and higher prize values and jackpots for the same individual stake. Both Playtech and Virtue Fusion's existing licensees will therefore enjoy the benefits of increased liquidity when their networks are combined.
Once integrated, the new bingo licensees will have access to an extensive number of slots and other games in Playtech's inventory.
Licensees will also benefit from the opportunity to integrate with Playtech's sophisticated IMS information management system. This provides real-time player management, enhanced cross-selling and VIP management tools which can greatly enhance an operator's opportunity for revenue growth.
Commenting on the acquisition, Mor Weizer, CEO of Playtech said: 'The acquisition places Playtech in the leading position in international online bingo markets, complementing our position in poker and casino and, following the GTS acquisition, as a content provider. It reflects our ongoing commitment to provide licensees with a comprehensive portfolio of best of breed gaming products.
"This is another significant enhancement of Playtech's product suite, bringing further liquidity and experience to our existing bingo offering and further strengthens our position as the pre-eminent software provider to the online gaming industry.
"Virtue Fusion is recognised as the market leader in online bingo, has an expanding international presence and a very strong reputation for high quality and expert management of their bingo network which has attracted a number of top-quality licensees. This acquisition extends the Playtech licensee portfolio and further strengthens the relationships with various existing Playtech licensees.
"In a number of newly regulated markets, bingo is an embedded part of the social and gaming culture and a product which finds early favour with regulators. Consequently we see this acquisition as not only furthering what is already Playtech's competitive advantage in the growing online gaming market as a whole, but as having the potential to generate meaningful opportunities in newly regulated markets.
"We believe that the acquisition of Virtue Fusion creates value for Playtech shareholders and the board anticipates the transaction will be earnings accretive in 2010 and beyond. '
Virtue Fusion chief executive Bob McCulloch said: 'We are delighted to be a part of Playtech. This deal will ensure our operators continue to benefit from the market leading VFA Bingo product and in addition can now profit from Playtech's greater international reach and access to a wider games portfolio.'
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