Slot machine maker Bally Technologies Inc said it will buy Israel-based online social games software developer Dragonplay Ltd for about US$100 million to tap into the thriving online social casino games market.
Bally Technologies said it would pay US$51 million in up front cash for Dragonplay, plus the amount of net working capital payable to Dragonplay’s shareholders in exchange for all of the issued and outstanding equity. The company would pay as much as US$49 million over the next 18 months to keep key employees and on condition that Dragonplay meets certain financial performance targets, it said on Thursday.
Bally Technologies said it expects to fund the transaction from cash on hand and via proceeds from its revolving credit facility. Subject to completion of certain conditions, the company aims to close the acquisition in July and expects it to be accretive to its fiscal 2015 adjusted earnings per share.
Union Gaming Group’s Robert Shore said in a note: “While macro fundamentals in the equipment industry remain challenged for a host of reasons, we have been observing growth in the social gaming space.”
Bally Technologies’ chief executive Richard Haddrill, said in a statement: “We expect this strategic acquisition to help position Bally at the forefront of social casino gaming by leveraging our world-class content, including proprietary table games and award-winning video slots, on Dragonplay’s increasingly popular social casino.”
He added: “With the majority of its revenues generated from smartphones and tablets, Dragonplay has proven remarkable foresight and leadership in the mobile space, which is the fastest growing segment of social gaming.”
Mr Haddrill, who was reappointed as Bally Technologies CEO last month, said this week the leadership change would allow the company to target new partnerships and acquisitions.
The firm says that Dragonplay, launched in 2010, ranks among the 10 top-grossing game developers in the social casino genre with approximately 700,000 daily active users.
For the 12 months ended March 31, 2014, Dragonplay reported more than US$10 million in earnings before interest, taxation, depreciation and amortisation (EBITDA).
Dragonplay has developed its games for Google’s Android platform but it also has offerings on Facebook and for Apple’s iOS.
“I am confident that leveraging Bally’s vast library of proven slot and proprietary table game content will provide our loyal player base with an even more robust experience, which is expected to augment Dragonplay’s growth trajectory,” said Dragonplay’s chief executive Sharon Tal.
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