Nordic online gambling operator Betsson becomes the second largest Georgian online gaming operator as it acquires privately-owned operator Europe-Bet.
The acquisition deal will see Betsson taking 30% market share in the Republic of Georgia with Europe-Bet’s online and retail betting divisions.
Betsson confirmed that the deal is worth $50m for an initial purchase consideration, which corresponds to 2.5 times Europe-Bet’s EBIT in 2014. In addition, an additional $35m will be payable after one year as long as gaming regulations in the country remain unchanged.
This implies a maximum total purchase consideration of $85m, which corresponds to 4.3 times EBIT for 2014.
“Europe-Bet has established a strong brand with a competitive multi-product offering in the locally regulated market of Georgia,” said Betsson CEO and President Magnus Silfverberg. “Together with Betsson’s technology, a foundation for profitable and sustainable growth within and outside Georgia is created.”
Betsson will fund the acquisition through a renewal of a revolving credit facility amounting to €35m ($39m), as well as a new revolving credit facility worth €75.4m ($83m).
In 2014, Europe-Bet generated revenue of $52.4m, of which online represented nearly 78% at $40.8m while the remainder came from land-based business, which to a large extent supports the online business.
The sportsbook-driven online business accounted for 44% of total revenue in 2014. Total EBIT amounted to $20m of which $17.9m is attributed to the online operations. The EBIT margin was 38.1%, giving the company double-digit growth in the last year.
“Betsson acquires the company from a group of entrepreneurs. Some of the founders will continue in strategic positions after the acquisition. Betsson has also retained other key employees to continue to operate the business,” the company said.
The deal is expected to be finalized next month and the acquisition will be presented at Betsson’s Q2 presentation on July 17.