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Contagious Gaming confirms Sportech takeover talks

Published: 10:56 18 Aug 2015 BST

overview
Sportech has a racing and digital division that supplies pool and tote betting software and services to licensed racing and betting operators.

Gaming and software supplier Contagious Gaming (TSX:CNS) confirmed today that it is in talks to acquire UK rival Sportech (LON:SPO).

The Canada-based firm said the talks are based around a cash-and-share offer, which is likely to have to be higher than Sportech’s share price on August 13 of 62.63p.

“A proposal has been made to Sportech” Contagious said, adding “the company expects to create significant shareholder value for existing and potential new shareholders of Sportech and Contagious Gaming.”

Contagious also said any deal was subject to conditions including securing appropriate debt and equity financing.

"There can be no certainty that the submission of the proposal will lead to Contagious Gaming making a formal offer or, in turn, the completion of the business combination," it said.

Sportech bought Vernons for £51mln from Ladbrokes in 2007, adding it to its Littlewoods and Zetters pools operations to form The Football Pools.

The company also has a racing and digital division that supplies pool and tote betting software and services to licensed racing and betting operators.

In 2014, Sportech generated revenues of £104mln (C$213mln) and underlying earnings [adjusted EBITDA] of £24mln (C$49mln) in the 2014 tax year.

The combination of Sportech and Contagious Gaming would create the largest pure-play, sports-focused gaming company on the TSX, should a deal be possible.

Contagious Gaming has until September 11 to make a formal bid for Sportech.

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