Canadian software outfit Contagious Gaming has made a bid to acquire Liverpool-based pools betting operator Sportech.
On Friday, Sportech confirmed recent media speculation by announcing that Contagious was kicking Sportech’s tires. The firm went on to say that any recommended offer – the bulk of which would be made in cash with the remainder in Contagious shares – would come at a premium to Thursday’s closing share price, which valued Sportech at 62.6p.
The proposal is contingent on Contagious being able to secure sufficient financing and a majority of Sportech shareholders thinking it’s a good idea. Sportech cautioned that there’s no guarantee any formal offer will actually be forthcoming. Sportech’s shares rose over 11% to 69.6p on Friday as news of the takeover bid spread.
In the event that a formal bid is made and accepted, Sportech said that its existing shareholders would receive “approximately half” of the potential net proceeds of the company’s long-running back-and-forth legal fight with the UK taxman over a £97m VAT repayment on Sportech’s Spot The Ball game. The balance of any VAT windfall would go to the enlarged Contagious Gaming group.
The Toronto-listed Contagious provides a full-service online gambling platform, as well as social gaming, real-money and lottery gaming content. The company also operates Goal Time, its proprietary remote in-play sports betting product that combines pool betting with a lottery format.
Contagious is currently performing due diligence on its proposed €5m cash-and-shares acquisition of German sports and race betting software developer Digitote, which provides its Xturf B2B platform for companies like Winners (bwin Spain) and Betcenter (Belgium), in addition to its own Gibraltar-licensed Digibet, which was among the 20 recipients of German federal sports betting licenses last September.
In its most recent fiscal year ending March 31, Contagious reported revenue of C$1.16m, up 52% year-on-year, while losses trebled to $1.27m due to increased administrative and regulatory compliance costs associated with the company listing on the Toronto exchange.