Playtech buys Ash Gaming for £23m
Playtech acquires UK casino games provider Ash Gaming for a fee of up to £23m, a deal first revealed by eGaming Review nine months ago.
Playtech has acquired UK casino games provider Ash Gaming for a fee of up to £23m, a deal first revealed by eGaming Review nine months ago when this publication learned both parties had entered detailed discussions.
Founded in 2002 Ash Gaming is one of the industry’s most respected content providers generating revenues from more than 40 games operated by more than 30 licensees. The total cash consideration for the business is worth up to £23m, with an initial sum of £15.5m and a deferred consideration of up to £7.5m, a statement to the stock exchange read.
Mor Weizer, CEO of Playtech, described Ash as having a “fantastic reputation” with its licensees for delivering “class-leading and innovative content” along with a growing presence both in the UK and internationally.
“We have known the team for some time and they will provide significant benefits to Playtech both in terms of expertise and knowhow, as well as the potential for a number of incremental revenue streams,” he said in a statement. “We are very excited about our plans for extending Ash’s games to a wider audience and throughout the Playtech casino product.”
On 15 April, just hours before Black Friday, a source close to the Israeli software provider informed eGR that Playtech was is in the “final stages” to acquire casino games provider Ash Gaming for an undisclosed amount. When contacted at the time a senior member of Ash Gaming refused to deny a deal was being done.
Ash Gaming is already on the Playtech-owned Gaming Technology Solutions (GTS) EdGE platform with GTS providing a number of its clients with several of Ash’s top performing games. Playtech acquired casino games developer GTS in late 2009 for an initial 10.8m with a further consideration of up to 21.6m based on the future performance of the business.
Playtech said the deal would enhance its wholly-owned content library and value chain economics; complements its technology leadership with additional premier content capability and add the potential for revenue synergies, incremental opportunities and uplift in margins for casino/games platform as well as poker and bingo side games.
The audited accounts for Ash Gaming recorded revenues for the year to 30 April 2011 of £4.2m (2010: £3.1m) and adjusted EBITDA of £2.6m (2010: £1.1m) and has seen accelerated growth in the months following that, according to this morning’s announcement. Ash Gaming’s pro forma annualised financials taken from the six month period to 31 October 2011 totalled revenues of £5.3m and adjusted EBITDA of £3.4m.
The annualised run rate taken from the three month period to 31 October this year is significantly ahead of this figure, it added, as the business continues to grow, has won new licensees and delivered a number of new games in the past few months.
Nick Batram, analyst at Peel Hunt, said that as a strategic bolt-on the deal “looks compelling” and that given Playtech’s acquisition track record including GTS, Virtue Fusion and iPoker, integration should be “relatively smooth”.
“The shares continue to be dragged down by ‘non-business’ issues,” he added, “but we believe that these are addressable, and therefore we maintain a buy.”
Weizer added that Ash was demonstrating “significant growth” and that he expects this to continue. “Ash Gaming continues to deliver great games that operators want on their sites. This is key for many licensees where content is king and we strive to provide them with the very best games and a diversified portfolio to enhance their player experience as that maximises their player loyalty and player value.”
“At the same time, we see this as complementing our strategic actions by ensuring class leading content alongside our leadership in technology. Together this makes a powerful combination and by owning significant games content we will maximise both revenue and earnings across the value chain. In newly regulated markets both in Europe and other territories such as Canada, Ash Gaming’s content is set to gain considerable traction,” he added.
Chris Ash, founder and CEO of Ash Gaming said that the strategic rationale for Ash to combine its content with Playtech’s offering was “evident” from early discussions.
“The ability to deliver our content through further casino, bingo, poker, retail and mobile channels will enable the combined business to grow faster and deliver a greater variety of cross channel product to the operators.
“The combination of platform and game development will lead to Ash Gaming’s ideas coming to fruition earlier than would have previously been possible.”
Ash Gaming employs 40 staff, mainly games developers, and it is understood that existing management team and staff will remain in place.