888 Holdings PLC (LSE:888) said it is selling its bingo business to Saphalata Holdings Ltd, a part of Broadway Gaming, to focus on its core platform and US growth strategies.
The online gaming company said the consideration for the bingo operations is US$50mln (approx. £38mln) in cash and includes a potential earnout of up to US$4mln, conditional on revenue-based performance criteria.
888 said the sale will help it focus on its core platform and make more resources available to drive growth in its core markets. It also reduces compliance issues arising from related accounts across B2B and B2C bingo and 888's core platform.
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The bingo business is operated on a separate technology platform and served by a designated operations team. The disposal deal encompasses the entire B2C and B2B bingo business, including all its exclusive technology, assets, operations, B2B clientele and consumer-facing brands.
The mostly UK-based bingo business reported revenue of US$65mln and EBITDA of US$7.4mln in 2020. The value of the gross assets, as set out in the 30 June 2021 balance sheet, was approximately US$71mln.
Completion of the sale is conditional on a reorganisation of the bingo business and the new structure receiving its own UK Gambling Commission (UKGC) licence. Completion is expected in the second quarter of 2022.
"Following a strategic review, we have taken the decision to sell the bingo business,” said 888 chief executive Itai Pazner.
“This strategic transaction will enable 888 to further increase its focus on its core platform and unified, scalable and proprietary technology, and grow our key product verticals of casino, sport and poker, as we continue in our mission to be one of the world's leading online betting and gaming businesses.”
David Butler, CEO of Broadway Gaming, added: “We are delighted to reach an agreement with 888 to acquire its bingo business and platform. By combining these with our existing business and brands, which include 'Butlers Bingo', we will be able to achieve an even stronger global footprint in key regulated bingo markets.
“We see significant further expansion opportunities in both the B2C and B2B segments, and are very excited about our plans for the future, as we work closely together to become the pre-eminent online bingo business globally."