Online gaming group 888 Holdings Plc (888.L) said Tuesday that it has agreed to buy the Wink Online Bingo business from Daub Ltd. for a total maximum consideration of GBP 59.7 million. The company also said that its full year trading remains strong and is in line with management's expectations. The agreement was entered through a wholly owned subsidiary of 888 Holdings, and the company expects the transaction to be financially attractive and earnings enhancing. The completion of the deal is subject to various closing conditions, including certain required consents.
888 anticipates that the acquisition will lead to further expansion of its B2C emerging offering segment, which improved by 99% during the first three quarters of 2009. Gigi Levy, chief executive officer said, "We are delighted to announce the Wink Bingo acquisition as an expansion of our B2C online Bingo footprint in the lucrative UK market. The Wink team has a proven track record of excellence in marketing, CRM and execution and will be a great addition to our growing Bingo business." The total maximum consideration payable to the vendor is limited to GBP 59.7 million and consists of base price and earn-out, subject to certain adjustments. Accordingly, the company will pay the base price of GBP 11 million in cash to the vendor on completion of the deal. The earn-out will be based on performance of Wink Bingo between five and six times earnings before interest, tax, depreciation and amortization during the 12-month period ending March 31, 2011, which will also be paid in cash. The company expects to make the earn-out payment during the second quarter of 2011. 888 Holdings said that Wink Bingo, launched in early 2008, has over 60 thousand active players as of October 2009. Wink Bingo's online bingo networks include Wink Bingo, Posh Bingo and Bingo Fabulous.
In its 11-month period ended November 30, Wink Bingo had profit before tax of GBP 1.3 million, revenues of GBP 15 million and together with its subsidiaries had gross assets of GBP 1.6 million. In addition, 888 Holdings said its trading, prior to entering the closing of fiscal 2009, remains strong and is in line with management's expectations.
For its third quarter, 888's operating income had declined 10% year-on-year, but remained flat sequentially. The company, at that time, said B2C business showed resilience during the historical seasonally weak summer period, while Dragonfish continued its impressive growth. Total operating income for the third quarter declined 10% to US$60.9 million from US$67.7 million in the comparable period last year.
888.L is currently trading at 112 pence, up 0.50 pence or 0.45%, on a volume of 39 thousand shares. In the past 52 weeks, the shares have been trading in a range of 78 pence-116.75 pence on the LSE.
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