Wink deal "no brainer" for 888

888 will look to steal market share from the leading players in the UK bingo market following yesterday’s acquisition of Wink Bingo in a deal valuing the business at up to £60m, chief executive Gigi Levy has told EGRMagazine.com.

The operator announced in a pre-close trading update yesterday that it was to acquire Wink Bingo from its owner Daub Limited, paying £11m in cash and an earn-out based on a multiple of six on Wink’s earnings before interest, tax, depreciation and amortisation in the 12-month period to 31 March 2011, with the total consideration capped at £59.7m.

Wink Bingo runs several bingo networks on 888’s Dragonfish platform, including Posh Bingo, and supported by sponsorships of popular peak-time ITV programmes such as All Star Family Fortunes and Harry Hill’s TV Burp, has grown its active player base to over 60,000.

Chief executive Gigi Levy (pictured) said Wink’s progress since its launch in February 2008 proved there was still potential for smaller players to carve a niche in the fiercely competitive UK online bingo market.

“What we saw in Wink is a relatively new competitor that can steal market share from the bigger guys. Gala has roughly 15% of the UK market, and 888 Ladies together with Wink will be roughly 9%. I see we can steal market share there, and we think the UK bingo market will also continue to grow,” said Levy.

Levy added that the structure of the transaction for Wink, which posted revenues of £15m and pre-tax profits of £1.3m in the 11-months to 30 November 2009, also made the acquisition “a no brainer” for 888.

“We had the chance to buy on a success-based deal on a multiple of six, which is very earnings enhancing, making it a no-brainer. The vendors are very capable marketers and did not want to limit themselves to a low number, as they think they can generate phenomenal growth next year, for which they have budgeted for up to £8m in profit. They actually wanted a cap that is slightly higher. We don’t expect to pay the full consideration,” said Levy.

In addition to expanding 888’s consumer online bingo footprint, the Wink deal also ties a valuable revenue stream into the Dragonfish platform ahead of the expiry of its contract with its biggest licensee, Foxy Bingo owner Cashcade, in 2011.

With respect to current performance, 888 said in its pre-close update yesterday that trading prior to entering the close period in respect to its final results “remains strong and is in line with management’s expectations.”