GVC restructures Betboo deal
The South American brand had been outperforming expectations, with average daily NGR in Q1 up 97% on the same period last year.
GVC holdings has restructured its Betboo deal more than a year ahead of the proposed earn-out, as the South American brand has exceeded expectations.
Betboo’s average daily net gaming revenue (NGR) for the first quarter this year is up 97% on the same period in 2010, with GVC convinced of the growth potential of Latin American markets.
The situation encourages comparisons with 888’s position with regards to Wink Bingo, which could cause the operator to pay over the odds when its own earn-out option expires at the end of next month.
888 acquired Wink in December 2009 from Daub Limited, paying £11m in cash and an earn-out based on a multiple of six on Wink’s earnings before interest, tax, depreciation and amortisation in the 12-month period to 31 March this year, with the total consideration capped at £59.7m.
At the time, Levy added that the structure of the transaction for Wink, which posted revenues of £15m and pre-tax profits of £1.3m in the 11-months to 30 November 2009, made the acquisition “a no brainer” for 888.
During the announcement of its annual results earlier this month, however, analysts suggested the earn out would be at the top end of expectations, due to a better than expected trading performance. A note from advisers Peel Hunt said this would be as much as £48m in cash with the group’s current gross cash position of around US$67m (approx. £42m) suggesting that the current terms of the earn-out agreement could exceed 888’s cash resources, and a renegotiation could well be achieved before March draws to a close. 888 has since said it is in talks regarding “the structure and timing of such a payment to ensure the group meets its obligations”.
The restructuring of GVC’s deal will see the extended earn-out period and the earn-out itself “based on regular monthly payments from 1 July 2011 plus a percentage of the NGR generated over the four year period to 31 December 2014, payable annually in arrears.”
Elsewhere, GVC released its own results for the seven weeks to 20 February, with total NGR per day up 19% on Q4 2010 and 10% of Q1 2010, with sports NGR per day more than tripling compared to the previous quarter.
The group also said it is carefully watching regulatory developments in Germany, where it is looking to invest more capital in its CasinoClub brand.