BUSINESS

Cherry AB acquires online casino and sports betting operator ComeOn Malta

TAGs: cherry ab, ComeOn

cherry-acquires-comeon-maltaSwedish online betting operator Cherry AB has taken steps to boost its Nordic market presence by acquiring the parent company of online casino and sports betting site ComeOn.com.

Last week, Cherry halted trading in its shares on Stockholm’s AktieTorget exchange after the stock’s value rose 25% in the past two weeks. On Thursday, Cherry announced that it was in the “final stages of a major acquisition.”

On Monday, Cherry confirmed that it had reached a deal to acquire a 49% stake in ComeOn Malta Ltd with an option to acquire the remaining 51%. ComeOn holds licenses in Malta, the UK and Curacao, and operates brands including ComeOn.com, Mobilbet.com, CasinoStugan.com, folkeautomaten.com, Suomikasino.com, GetLucky.com and Kasyno.pl. The sites boasted a combined active customer list of over 133k as of December 2015.

Cherry has agreed to pay a maximum total consideration of €280m for the whole ComeOn enchilada. The figure is based on a multiple of 10x ComeOn’s 2016 operating profit, which Cherry estimates will come in between €19m and €23m. ComeOn’s 2015 operating profit was €13m, which represented a 70% rise over 2014’s profit. ComeOn reported total sales of nearly €80m in 2015, up 60% from 2014.

Cherry’s payment for the deal(s) will be made in two tranches. The first tranche, which will cover the 49% stake, will total €80m (half cash, half new Cherry shares).

Cherry has until Dec. 31, 2016 to exercise its option to purchase the remaining 51% of ComeOn. Should it opt not to pull this trigger, ComeOn has the right to repurchase the shares for €40m.

The acquisition needs to be approved by Cherry shareholders at an extra shareholders’ meeting at the end of May or beginning of June. Assuming the vote is positive, Cherry said it expects its share of ComeOn’s 2016 net returns will total around €6m.

Cherry believes the ComeOn brands will complement its existing operations, particularly in sports betting, which accounted for one-third of ComeOn’s 2015 revenue. Synergies are expected to be realized through more efficient marketing as well as reduced costs for payment solutions and gaming suppliers.

ComeOn’s management and founders are staying on to help drive the business forward, and no redundancies are planned among ComeOn’s current 210-strong payroll or Cherry’s own workforce, as both companies are “growing faster than the market” and all hands are needed on deck to maintain this expansion.

ComeOn spokesperson Hans Martin Nakkim said management was looking forward to “staying operationally involved with the new ownership, while still having a big stake in the future growth of the consolidated Cherry.”

Cherry CEO Fredrik Burvall said the new brands would “strengthen Cherry’s position in online gambling against competitors in Scandinavia and other European markets.” Burvall also believed Cherry will “profit from the strong entrepreneurial spirit within ComeOn.”

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