LeoVegas enters an agreement to acquire rival operator Royal Panda for a maximum consideration of €120m.
Stockholm-listed mobile gaming specialist LeoVegas is going to acquire Royal Panda, a proprietary technical platform focused on online casino, for a purchase price of EUR 60 million with a possible earn-out payment of an additional EUR 60 million. The LeoVegas Group has obtained debt financing of EUR 100 million, of which EUR 40 million constitutes a revolving credit facility.
The expected date of completion of the acquisition to be transferred is the 1st of December 2017. LeoVegas board of directors has adjusted company’s financial targets. Royal Panda has the right to a contingent consideration to a maximum of EUR 60 million if certain financial milestones are met within 12 months after the closing. That’s why the total purchase price can reach a maximum of EUR 120 million.
In order for Royal Panda to be entitled to the maximum earn-out, the company must achieve at least EUR 50 million in Net Gaming Revenue (NGR) and EBITDA of at least EUR 15 million, at least EUR 34 million of NGR must be derived from the UK, and EBITDA from the UK must amount to at least EUR 5 million. The acquisition of Royal Panda is in line with LeoVegas strategy to continue growing on regulated markets.
LeoVegas has a strong cash position that has been used for the initial purchase price. In addition, LeoVegas has obtained a debt financing of EUR 100 million in order to act on future acquisition opportunities. Out of the EUR 100 million, EUR 40 million consists of a Revolving Credit Facility (RCF). The financing has a term of three years, and amortisation will commence in the second quarter of 2019 in the amount of EUR 10 million quarterly. The interest rate on financing is approximately 2 percent.
The launch looks promising and LeoVegas believes that the acquisition of Royal Panda is going to strengthen the company’s expansion in regulated gaming markets, especially in the UK. Royal Panda has just launched a sports book and works well with sport customers. Located in Malta, the company has around 60 employees at the moment.
Gustaf Hagman, Group CEO at LeoVegas, says, «Royal Panda has in a short time built up an efficient business with an exciting and strong brand. This is a major acquisition that we are carrying out following a carefully executed process. With the help of the strong symbolic value in the panda, the company has built a premium brand among gamers, and we will complement LeoVegas with Royal Panda. This gives us two great brands with global appeal, which makes the scalability in the continued growth strong while strengthening our position in the UK.»
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