artyGaming said it had paid an initial consideration of us$ 118 million for the entire issued share capital of Cashcade Limited, with an agreement to pay a further us$ 39.3 million in cash dependent on the company’s future performance.
The terms of the deferred payment stipulate that PartyGaming will pay a further us$ 24.6 million to Cashcade shareholders in March 2010 if the company’s 2009 EBITDA equals or exceeds us$ 24.6 million, and a further us$ 14.7 million in March 2011 if Cashcade’s 2010 EBITDA equals or exceeds us$ 31.1 million.
Failure to meet either of these targets will result in a downwards adjustment in the amount payable on a straight-line basis, with no payment being made if 2010 and 2011 EBITDA fails to reach us$ 19.6 million and us$ 24.6 million respectively.
Commenting on the today’s announcement, PartyGaming CEO Jim Ryan said that the acquisition of Cashcade was in line with the company’s M&A objective of acquiring businesses that can propel Party to the top three position in each of the four product verticals in which it operates; namely poker, casino, sports betting and bingo. "Cashcade provides us with an excellent platform to build a meaningful share of the us$ 1.5 billion global online bingo market,” said Ryan.
Patrick Southon, Cashcade's Managing Director, added: "This is a very exciting day for Cashcade and we are delighted to join the PartyGaming organisation. We believe there is a substantial opportunity to leverage our existing business now that we are part of the world's leading online gaming company."
Cashcade generated net revenue of us$ 73.7 million in 2008 from its portfolio of online bingo sites which include Foxy Bingo, Think Bingo, Cheeky Bingo and Bingo Scotland, as well as online casino sites such as GetMinted and Foxy Flutter. The company also provides its services to the branded gaming offerings of media groups Trinity Mirror plc, STV Group plc and Emap plc.
Cashcade’s casino technology platform is provided by IGT subsidiary WagerWorks while its bingo platform is provided by PartyGaming rival 888 Holdings plc, under a contract which is believed to expire in 2012. Shares in PartyGaming plc (Co. Profile) closed yesterday in London down 1.26% on the day.