Churchill Downs acquires Big Fish Games for $885m
Kentucky-based horse-racing operator to pay initial sum of $485m as it takes its first major step into the social gaming sector
Horserace wagering operator Churchill Downs Incorporated (CDI) is set to acquire social games publisher Big Fish Games in a deal worth up to US$885m (£560m).
The Kentucky-based company will acquire Big Fish for an initial $485m on a cash-free/debt-free basis, as well as a potential earn-out payment of up to $350m and $50m bonus payment to Big Fish CEO Paul Thelen.
Goldman Sachs is acting as financial advisor to CDI and JPMorgan as lead on the financing of the acquisition, the price of which was based on a multiple of approximately 8.5x Big Fish’s adjusted EBITDA of $57.3m for the 12 months ended 30 September 2014.
“The acquisition of Big Fish and our entry into the rapidly growing mobile and online games industry gives us new products, new customers, new geographies and new sizeable growth opportunities,” Bill Carstanjen, CDI chief executive, said.
“While many will view this transaction as a logical extension to what we currently do with Twinspires.com, what is most important to us are the strong team and the processes and capabilities that have been built by Big Fish in Seattle, Oakland and Luxembourg,” he added.
Seattle-headquartered Big Fish Games was founded in 2002 by CEO Paul Thelen and placed sixth in this year’s Social Casino Intelligence Power 25 rankings.
The company, which recorded gross revenues of $266m in 2013, is estimated to be the second-biggest social casino publisher on mobile according to research firm Eilers Research with a market share of 14% in Q3 2014.
“We believe Big Fish is now positioned to become an even greater force in the casual, mid-core and social casino mobile and online games industry,” Thelen said.
“Churchill Downs is a company with a commitment to interactive entertainment and a track record of growth and performance,” he added.
The deal for Big Fish Games is the latest in a number of high-profile transactions in the social casino space this year including Caesars Interactive Entertainment’s purchase of Pacific Interactive and Bally Technologies’ acquisition of Dragonplay.
Last month Imperus Technologies also announced a deal to buy Best Casino publisher diwip for $100m.