Online gaming company Intertain Group (TSE:IT) said it has acquired the Jackpotjoy business of privately held Gamesys in a deal valued at around $650 million in cash and stock.
The deal is expected to make Intertain the largest provider of online, bingo-led gaming, the company said.
Under the terms of the deal, Intertain will acquire a newly-incorporated subsidiary of Gamesys, which will hold all of the brands, and player data assets within the Jackpotjoy business.
Intertain said the acquisition provides the potential for significant growth in EBITDA and free cash flow, at high margins and conversion rates.
"Our stated vision is to focus on the female demographic, in regulated markets," said chief executive officer, John Kennedy.
"This acquisition is consistent with this vision. We feel privileged to be inheriting this strong community of players. We have not only acquired the leading online, bingo-led business, but we are also entering into a long-term relationship with one of the most well respected, technology and gaming operators, Gamesys."
Intertain believes it will have one of the highest proportions of revenue derived from regulated markets among publicly traded online gaming companies post acquisition, as over 90 perfcent of Jackpotjoy's business is sourced from regulated markets.
Gamesys and its subisidiary have also agreed to provide platform services and gaming content to Intertain for up to 10 years, to allow it to run the Jackpotjoy assets.
Intertain said 13 percent of the initial purchase price will be funded through the issuance of its common shares. The cash portion will be funded through a combination of new credit facilities and a public offering of subscription receipts, it added. Gamesys will also be entitled to potential future earn-outs, based on future EBITDA performance of the Jackpotjoy business.
Real-Money Jackpotjoy, which launched in the UK in 2002, has number one market share in the UK, with over 100,000 monthly active users across the UK, Eire and Sweden.
The deal is expected to close in March, subject to regulatory approvals.
Shares of Intertain climbed 2.6 percent to C$17.18 in Toronto on Thursday afternoon. The stock has more than quadrupled in the past 12 months.