Acquisition

RNS Number : 1345A

Paddy Power plc

02 October 2009

 



COMPLETION OF SPORTSBET PTY LTD'S ACQUISITION OF INTERNATIONAL ALL SPORTS LIMITED 

Paddy Power plc ('Paddy Power') is pleased to announce that Sportsbet Pty Ltd ('Sportsbet'), in which Paddy Power holds a 51% shareholding, has completed its acquisition of International All Sports Limited ('IAS') (the 'Acquisition') effective 1 October 2009.  Details of the Acquisition were initially announced on 3 June 2009.

The Acquisition valued the entire issued share capital of IAS at AUD40m (€24.1m), requiring further expenditure of AUD32m (€19.3m) by Sportsbet in relation to the 80.02% of the shares it did not own at the Acquisition date. Sportsbet has raised AUD20m (€12.0m) of bank debt (on a non recourse to shareholders basis) to part fund the Acquisition. The remaining AUD12.0m (€7.2m) has been funded (in the form of shareholder loans to Sportsbet) by Sportsbet's shareholders pro rata to their shareholdings resulting in funding of AUD6.1m (€3.7m) from Paddy Power. 

Financial Performance Thresholds Re Paddy Power's Acquisition of Sportsbet

As announced on 3 June 2009, Paddy Power agreed with Sportsbet's minority shareholders certain amendments to the future financial performance thresholds related to Paddy Power's acquisition of its 51% shareholding in Sportsbet, subject to the Acquisition proceeding. The agreed amendments are as follows: 

1)  The contingent consideration of AUD10m (€6.0m), which was to become payable by Paddy Power to Sportsbet's minority shareholders if Sportsbet generated EBITDA (before transaction and restructuring costs) in excess of AUD16.5m (€9.9m) in the calendar year 2009, will now become payable if the combined EBITDA of Sportsbet and IAS in the year ending 30 June 2010 (before transaction and restructuring costs) exceeds AUD26m (€15.7m);

2)  Paddy Power's right to claw equity from Sportsbet's minority shareholders, on a proportionate basis to the shortfall in profitability in any of the years ending 30 June 2010, 2011 or 2012, will now be triggered if the combined EBITDA for Sportsbet and IAS is less than AUD22m (€13.3m) in any of these years (previous threshold for Sportsbet on a standalone basis was AUD11m (€6.6m)); and

3)  The exercise price of Paddy Power's call option to acquire all of the outstanding shares in Sportsbet that it does not own, exercisable in either 2012 or 2013, will now be determined based on combined Sportsbet and IAS EBITDA, with a multiple of 4 times EBITDA applying if the combined EBITDA level is less than AUD20m (€12.0m) and a multiple of 7 times EBITDA applicable if the combined EBITDA is in excess of AUD56m (€33.7m). The multiple that will apply for combined EBITDA between these lower and upper thresholds will continue to be determined on a broadly straight line basis. (The previous multiple range for Sportsbet on a standalone basis was 5 times (for EBITDA below AUD20m (€12.0m)) to 7 times (for EBITDA above AUD42m (€25.3m)). The maximum consideration payable by Paddy Power under its call option remains unchanged at AUD245m (€147.6m).

For further information, please contact:

Patrick Kennedy                                                                              Jack Massey

Chief Executive                                                                              Finance Director

Paddy Power plc  
Tel: + 353 1 404 5912              
 

 

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