PartyGaming to focus on mainland Europe after Cashcade buy
PartyGaming aims to focus on continental European growth as it rolls out Cashcade and Party bingo brands alongside more white-label deals, the company said today.
As reported on EGRmagazine.com earlier, PartyGaming has acquired Foxy Bingo owner Cashcade for £71.9m, with an additional payment of up to £24m dependent on performance.
To take a larger portion of the rapidly growing global online bingo market, PartyGaming will look to business-to-business (B2B) deals such as those recently signed with Italian land-based lottery services provider Intralot and Cirsa, the largest land-based bingo operator in Spain.
A PartyGaming spokesperson told EGRMagazine.com to “expect us to do more B2B deals” to take a slice of the global online bingo market, which is set to grow from US$1.5bn to US$2.8bn by the end of 2012, according to industry data business H2 Gambling Capital.
“Europe is the exciting area for us,” the Party spokesman said. “Cashcade will be helping us build the PartyGaming platform while continuing to building their own brand, but we will also be looking to build market share through more B2B deals following those with Intralot, Cirsa, DM and Channel 5″.
However he denied the deal would only be earnings enhancing in the short term with regard to the more competitive and saturated UK bingo market, forecast by H2 to grow by 14.5% from 2008-2012, compared to 16% globally.
“Cashcade has recently grown its share of the UK market to 23%, so they’re really at the top of their game in terms of taking share from other competitors,” he said.
PartyGaming said it expects Cashcade to add around £6m to its earnings before interest, tax, depreciation and amortisation (EBITDA) in the remaining five months of the current financial year. Ivor Jones of Evolution Securities told EGRmagazine.com he expects analyst consensus on Party’s earnings forecasts for FY 2010 to settle around the +15% mark, but cautioned this was subject to change. This would place Party’s projected EBITDA for 2010 in the US$150m to US$160m range.
PartyGaming also told EGRmagazine.com it had the necessary access to the cash and debt markets required to play a role in the unfolding consolidation play, following its recent settlement with the US DOJ. Party had £193.1m cash on the balance sheet at of 31 December 2008. The £95.9m total consideration for Cashcade and the settlement of £72m to the US DOJ will however be met from this.
Party finance director Martin Weigold revealed in a conference call to journalists that the company had already been engaged in “extensive discussions” with banks in relation to raising funds for further M&A activity.