Intertain says losses increase tenfold, claims to be mulling takeover bids

intertain-group-mulling-saleShares in Canadian online gambling firm Intertain Group leapt by one-fifth on Thursday after the company claimed it was mulling “many” takeover bids.

Intertain released its Q4/FY15 numbers on Thursday, which showed strong revenue growth across its various online gambling brands. However, costs associated with the acquisition spree that brought all those brands into Intertain’s fold resulted in net losses rising tenfold to C$134.4m for the quarter and $227m for the year.

The Jackpotjoy and Mandalay online bingo brands reported Q4 revenue up 20% to $90.7m and up 7% to $11.7m, respectively, while the Vera&John online casino improved 45% to $22.7m. Based on these improvements, Intertain set its 2016 revenue guidance at between $460m and $500m.

Intertain’s soon-to-be-ex-CEO John Kennedy Fitzgerald claimed the results “demonstrated the quality and performance of Intertain’s business segments” while emphasizing that “our customer base is stable and growing.”

Intertain said the report had convinced its board that the company’s share price is “misaligned with its fundamental business results” and therefore the board has formed a special committee to consider various ways of delivering shareholder value. Chief among these possibilities is considering the “many expressions of interest in acquiring all or material parts of its business” that Intertain’s board claims to have received.

If something about this announcement seems familiar, it likely has to do with Intertain’s links with fellow Canadian online gambling firm Amaya Gaming Group. Intertain began life as an Amaya offshoot, with ex-Amaya execs acquiring Amaya’s B2C online casino business, then embarking on an Amaya-like spree of acquisitions with other people’s money.

Now, just as Amaya CEO David Baazov’s alleged bid to take his company private helped revive Amaya’s share price following a spate of bad news, Intertain’s alleged takeover arrives on the heels of Intertain’s own string of bad press, including shareholder complaints of excessive compensation for Intertain’s senior management and a short-seller essentially accusing senior management of running a Ponzi scheme.

Intertain also announced that directors Stan Dunford and Mark Redmond had stepped down immediately. In their stead, current Pala Interactive CEO and former co-CEO Jim Ryan has been appointed an independent director, while current Intertain board member David Danziger has been appointed chairman.