Toronto-based Intertain Group Limited (IGL), the holding company that offers business-to-consumer (B2C) online bingo, casino, and poker gaming entertainment, is all set to make itself the world’s largest provider of online bingo, as it has finalized the Purchase Agreement closed with UK-based Gamesys Ltd.
For an Initial Purchase Price (IPP) of £425.8 million, which in Canadian currency is approximately equivalent to CA$809 million, and subsequent Earn-Out Payments based on future Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Gamesys has agreed to cede ownership of Target Company to IGL. Target Company is the newly formed subsidiary, which the UK gaming company created in consolidating the operation of all bingo brands under Gamesys’ Jackpotjoy Business, comprising the UK-, Eire-, and Sweden-facing Jackpotjoy Bingo, the Jackpotjoy social casino, the Star Spins real money and social websites and the social bingo business Botemania.
The Gamesys Jackpotjoy Business acquisition will beef up Intertain’s existing portfolio of online gaming businesses, consisting of InterCasino, InterPoker, Vera & John, Costa Bingo, and other Mandalay Media bingo brands.
The Agreed IPP Payment Modes
Thirteen percent (13%) of the £425.8 million IPP will be settled by the issuance of £56.8 (CA$108.40) million worth of Intertain common stocks. The rest, representing the cash payment will be sourced from new secured loan and revolving credit facilities underwritten by Macquarie Capital (USA) Inc. and from funds raised through public offering of 28 million Subscription Receipts (SR) valued at CA$15.00 per SR.
The Agreed Earn Out Payment Structure
The subsequent Earn Out payments will be the average EBITDA earned by non-Botemania brands for the 12-month period following the date of transaction closing. Earn outs due from average EBITDA of up to CA$63.1 million less the previously paid IPP, will be multiplied by nine (9). Average EBITDA of non-Botemania in excess of CA$63.1 million will be multiplied by 4.5. The Botemania Brands will likewise generate earn outs, but based on the EBITDA for a 12-month period after the 24th and 36th month of operations following the close of the acquisition transaction, multiplied by nine (9).
In addition and in the event that the Jackpotjoy business realizes EBITDA of £80.0 (CA$152).million, £85.0 (CA$162) million and £92.5 (CA$176) million during a 12-month period after the 36th, 48th and 60th months respectively, counting from the close of the transaction, Gamesys will receive £5.0 (CA$9.5) million in each of the 12-month period.
Gamesys UK and Gamesys Gibraltar have both agreed to furnish the Jackpotjoy Business with related gaming platform services for ten years, with option to extend the license of specific gaming content for ten more years.
Noel Hayden, Gamesys founder, principal shareholder, and Managing Director who will be joining the Intertain Group as a non-executive member of the Board of Directors, commented that Gamesys and the Intertain Group are an ideal match. He recounts that from their earliest discussions, it became evident that they share the same vision, which is a critical element for a successful and enduring partnership and one that makes the Intertain and Gamesys merger a great arrangement for the shareholders, employees and players of both companies.
The CEO of Intertain, John Kennedy FitzGerald, explained that the acquisition is line with the company’s vision of focusing on the female demographics. He added that they have acquired a leading online bingo-led enterprise from which they inherited a well-built community of online players as well as gained a long-term partnership with Gamesys, one of today’s most revered gaming and technology operators.