Acquisition

RNS Number : 1230H

Playtech Limited

15 February 2010

 



Playtech Limited

('Playtech' or the 'Company')

Acquisition of business and assets of Virtue Fusion Limited ("Virtue Fusion")

Playtech Ltd, the leading software provider to the online, mobile, TV and land based gaming sector, today announces it has acquired the business and assets of Virtue Fusion, the leading developer and licensor of online bingo products.

In summary:

§ Initial consideration of £29 million (€33.4 million), subject to agreed working capital adjustments, funded

     from Playtech's existing cash resources  

§ Additional earnout payment of up to £7 million (€8.1 million) payable in the first quarter of 2011 based on

     adjusted EBIT performance in 2010

§ Transforms Playtech into the market leader in bingo, complementing its leading position in poker and

     casino, and as content provider

§ Substantially enhances player liquidity with additional cross-selling opportunities

§ Adds a suite of leading brands to Playtech's growing stable of licensees

§ Transaction anticipated to be earnings accretive in 2010

In the 12 months to 31 December 2009, the financial performance attributable to the assets being acquired comprised turnover of £12.3 million (2008: £8.1 million) and adjusted EBITDA of £3.8 million (2008: £2.3 million). These figures are based on the unaudited consolidated accounts of Virtue Fusion's group, and reflect the fact that bingo has been one of the fastest growing segments in online gaming in 2009.

Virtue Fusion

Virtue Fusion was founded in 1999 and has developed into one of the most liquid bingo networks with peak traffic of more than 6,000 concurrent players. As well as its core UK market, Virtue Fusion has a growing international presence in other European countries. It has more than 20 licensees including well known brands such as Mecca, William Hill, Ladbrokes, Virgin, Sky, Bet365, Paddy Power and Crown Bingo.

Virtue Fusion offers both an integrated and a turnkey solution to its licensees. Operators can join the network or choose to have an end-to-end bingo solution. All of the bingo products are multi-currency and multi-language. The founders and key personnel of Virtue Fusion have contracted to remain with the business for a minimum of two years.

Combined benefits

For Playtech, the acquisition significantly enhances its own bingo offering, brings new licensees and enhances its relationships with a number of existing licensees. It also positions Playtech as the leading supplier in all of the key product segments in the online gaming industry, with very substantial liquidity in each of its player networks.

As with poker, network player liquidity is an important element for bingo operators.  By linking the operator's bingo rooms across the network, Virtue Fusion can facilitate more frequent games being offered and higher prize values and jackpots for the same individual stake. Both Playtech and Virtue Fusion's existing licensees will therefore enjoy the benefits of increased liquidity when their networks are combined.

Bingo is a community-based game and bingo sites typically enjoy a loyal customer base with high player retention rates.  Additional revenue is generated through side games including networked games such as slots and scratch cards played concurrently with the bingo games. Once integrated, the new bingo licensees will have access to an extensive number of slots and other games in Playtech's library.

Licensees will also benefit from the opportunity to integrate with Playtech's highly sophisticated IMS information management system. This provides real-time player management, enhanced cross-selling and VIP management tools which can greatly enhance an operator's opportunity for revenue growth.

Commenting on the acquisition, Mor Weizer, CEO of Playtech said:

"The acquisition places Playtech in the leading position in international online bingo markets, complementing our leading position in poker and casino and, following the GTS acquisition, as a content provider. It reflects our ongoing commitment to provide licensees with a comprehensive portfolio of best of breed gaming products.

This is another significant enhancement of Playtech's product suite, bringing further liquidity and experience to our existing bingo offering and further strengthens our position as the pre-eminent software provider to the online gaming industry.

Virtue Fusion is recognised as the market leader in online bingo, has an expanding international presence and a very strong reputation for high quality and expert management of their bingo network which has attracted a number of top-quality licensees. This acquisition extends the Playtech licensee portfolio and further strengthens the relationships with various existing Playtech licensees.

In a number of newly regulated markets, bingo is an embedded part of the social and gaming culture and a product which finds early favour with regulators. Consequently we see this acquisition as not only furthering what is already Playtech's competitive advantage in the growing online gaming market as a whole, but as having the potential to generate meaningful opportunities in newly regulated markets.

We believe that the acquisition of Virtue Fusion creates value for Playtech shareholders and the board anticipates the transaction will be  earnings accretive in 2010 and beyond. "

Bob McCulloch CEO of Virtue Fusion (Alderney) Ltd commented: "We are delighted to be a part of Playtech. This deal will ensure our operators continue to benefit from the market leading VFA Bingo product and in addition can now profit from Playtech's greater international reach and access to a wider games portfolio."

- Ends -

Euro-denominated figures are calculated on the basis of €1.15: £1 as at midday on Friday 11 February, 2010.

For further information contact

Playtech Ltd Mor Weizer, Chief Executive Shuki Barak, Chief Financial Officer Ross Hawley, Head of Investor Relations c/o Pelham Bell Pottinger	[phone]
Collins Stewart Piers Coombs / Bruce Garrow	[phone]
Deutsche Bank Mumtaz Naseem	[phone]
Pelham Bell Pottinger David Rydell / Olly Scott / Samantha Boston	[phone]

About Playtech

Playtech develops unified software platforms for the online and land based gambling industry, primarily targeting existing online operators wanting to upgrade their system; sportsbooks looking to diversify and land-based operators making their online debut. Playtech gaming applications - online casino, poker, bingo, mobile gaming, live gaming, land-based kiosk networks and fixed-odds games - are fully inter-compatible and can be freely incorporated as stand-alone applications, accessed and funded by players through the same user account and managed by the operator by means of a single powerful management interface. Founded in 1999, Playtech has more than 800 personnel distributed globally, around seventy five percent of whom are engaged in research and development of current and future gaming technologies.

www.playtech.com

About Virtue Fusion

Virtue Fusion develops Bingo and networked gaming solutions for the online gambling industry, primarily targeting existing online gaming operators, bookmakers, land-based operators and media companies. Virtue Fusion continues to be the world's leading developer and licensor of Internet bingo products in the UK. The Virtue Fusion gaming network offers some of the largest bingo prizes to be found with peak traffic of over 6,000 concurrent players. The Group specializes in providing Bingo, networked games such as slots and scratch cards. Some of the world's best-known brands use Virtue Fusion Bingo solutions, including Ladbrokes, William Hill, Sky, Bet365 and Crown Bingo. Virtue Fusion continues to focus on the UK as its core market whilst launching products into Scandinavia and Europe during 2007. Virtue Fusion operates out of Alderney and is currently applying for a Maltese Licence.

www.virtuefusion.com

 

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