PartyGaming Plc (LSE:PRTY) announced it has acquired the entire issued share capital of Cashcade Limited, the owner of a number of UK’s major bingo and casino websites. The acquisition is worth £71.9 million, which could be followed by up to £24.0 million, hinged on Cashcade’s future profit performance.
The company is using the available cash resources to fund the deal.
Cashcade’s revenue for the past calendar year amounted to £44.9 million, a substantial increase from £28.5 million in 2007. The company’s EBITDA (earnings before interest, tax, depreciation and amortization) was £12.2 million for the same year.
Cashcade’s network of bingo sites includes FoxyBingo, Think Bingo, Bingo Scotland, Cheeky Bingo and Little Big Bingo.
The Gibraltar-based PartyGaming hopes this acquisition will help the company get a bigger share of the online bingo market.
“Cashcade provides us with an excellent platform to build a meaningful share of the $1.5 billion global online bingo market. Our M&A objective is to acquire companies that can put us into a top three position in each of our four product verticals and deliver substantial revenue and cost synergies,” said PartyGaming CEO Jim Ryan.
PartyGaming has seen a year on year drop in revenue in Q1 this year, owing to the declines in consumer spending and increased competition from US online poker sites. The business reached a USD 105 million settlement with the US government in April to avoid prosecution for providing online gambling services in the US before the industry was banned in October 2006.
PartyGaming has added 4.5% on today’s news.