888 to sell bingo business to Broadway Gaming for $50mln
888 has reached an agreement to sell its entire B2C and B2B bingo businesses, to Saphalata Holdings a member of the Broadway Gaming group.
The consideration is $50m on a cash-free debt-free basis, including a potential earnout of up to $4m, based on achievement over six months of revenue-based performance criteria.Consideration will be paid in cash upon completion of the Transaction, with the potential earnout payable within approximately six months thereafter.
888 has agreed to provide Broadway certain transitional services for a period of up to 12 months from completion, in accordance with an agreed fee schedule. 888 has a clear strategy to be a global leader in online betting and gaming by building market-leading positions in attractive regulated markets, driven by proprietary technology, product leadership, leading brands, and marketing expertise.
As part of a strategic review, the Group took the decision to sell the bingo business to improve its focus on its core platform, enabling greater resources to drive growth in its core markets and reducing compliance complexity arising from related accounts across B2B and B2C bingo and 888’s core platform. The bingo business, which is delivered through a combination of B2B services under the Dragonfish brand and multiple leading B2C brands, is operated on a separate technology platform and primarily served by a designated operations team.
The Transaction encompasses the entire bingo business of the Group, including all its exclusive technology, assets, operations, B2B clientele and consumer-facing brands. The bingo business, which is substantially UK-based, generated in 2020 revenue of approximately $65 million and EBITDA of $7.4 million.
The loss before tax in 2020 was $76.4 million, including a goodwill impairment of $79.5 million. The value of the gross assets subject to the transaction, including the remaining goodwill, as set out in the 30 June 2021 balance sheet, was approximately US$71 million. Completion of the Transaction is conditional upon, amongst other items, completion of a reorganisation of the bingo business and that new structure receiving its own UK Gambling Commission (“UKGC”) licence. Completion is currently expected to occur during the second quarter of 2022.
Itai Pazner, CEO of 888, commented: “Following a strategic review, we have taken the decision to sell the bingo business. This strategic Transaction will enable 888 to further increase its focus on its core platform and unified, scalable and proprietary technology, and grow our key product verticals of casino, sport and poker, as we continue in our mission to be one of the world’s leading online betting and gaming businesses.The high-quality bingo business has been an important part of 888’s history, and over many years we have developed an advanced B2B offering alongside a suite of popular consumer-facing brands. As part of an enlarged business, I am very confident that the future for the bingo business is bright. I would like to express my immense gratitude for all of the hard work of the team over the years.”
David Butler, CEO of Broadway Gaming, commented: “We are delighted to reach an agreement with 888 to acquire its bingo business and platform. By combining these with our existing business and brands, which include ‘Butlers Bingo’, we will be able to achieve an even stronger global footprint in key regulated bingo markets. We have worked intensively with the 888 group over the course of the last few months and have been very impressed by the quality of the bingo platform and product, the B2C and B2B businesses, its approach to safer gambling and player protection, and above all the management team. We see significant further expansion opportunities in both the B2C and B2B segments, and are very excited about our plans for the future, as we work closely together to become the pre-eminent online bingo business globally.”