Aristocrat buys Vikings: War of Clans maker Plarium for $US500 millionAustralia 11 Agosto 2017
(Australia).- Aristocrat´s $US500 million ($677 million) purchase of Israeli social gaming company Plarium confirms the company´s status as a technology business, according to chief executive Trevor Croker.
Plarium makes digital strategy games such as the popular Vikings: War of Clans, which Mr Croker said would complement the poker machine manufacturing and online gaming giant´s existing businesses.
The deal, announced on Thursday, would mean digital sources would grow to 22 per cent of its overall revenue, based on results for the year to March 2017.
"I think if you had told us four or five years ago we would be looking at the digital space, I´m not sure we would have believed you," Mr Croker told The Australian Financial Review.
"But I do look at us as a technology company now, not a manufacturing company. We have a lot more software engineers and coders building things in the digital space than we would have manufacturing engineers, for example. The deal brings digital to 22 per cent of the business, and growing."
Mr Croker had previously said an acquisition in the digital space would make sense for Aristocrat, particularly given its digital division is a relatively small portion of its business.
Following the Plarium acquisition he reiterated that Aristocrat would continue to look for further deals for digital businesses. "We will continue to look for opportunities in the [merger and acquisition] space, but only if they are sensible and make sense for Aristocrat shareholders."
Plarium´s games are free-to-play but several additional features are paid for, allowing the games to be monetised, and adds to Aristocrat´s Video Gaming Technologies and Product Madness online gaming and wagering businesses. The company is also famous for its Lightning Link poker machine.
Plarium CEO staying on
Aristocrat said its latest deal would be earning per share positive and that Plarium CEO and co-founder Avraham Shalel will continue to lead the firm post acquisition and that he and 12 other members of Plarium´s management team would stay on and had agreed to deferred consideration arrangements with Aristocrat.
Plarium is a privately owned free-to-play mobile, social and web-based game developer headquartered in Herzliya, Israel, and has more than 1200 employees across five studios and offices in Europe, Israel and the US. The firm recorded EBITDA of $US44 million from $US201 million revenue in the year to March.
The deal implies a multiple of 10 times earnings before interest tax depreciation and amortisation at year end.
"The strategic and financial benefits are compelling for Aristocrat shareholders," said Mr Croker. "Following the acquisition of Product Madness in 2012, Aristocrat´s digital division experienced exceptional growth and Product Madness is now a top five social casino gaming publisher globally.
"Plarium provides a unique opportunity to continue and accelerate this growth by diversifying into attractive new mobile gaming segments. It is a great start-up story. It was only started in 2009 and it has been profitable since then."
The market backed the deal, pushing Aristocrat´s share price up 46¢ to $21.26 on Thursday.
Soon to be based in Las Vegas, Mr Croker took over from Jamie Odell in February. He said the Plarium deal would push Aristocrat, which primarily derives its revenue in North America and Australia, into Europe, where Plarium makes 34 per cent of its income from.
Mr Croker said guidance for its full-year results was still 20-30 per cent above 2016, in which it made an underlying net profit to $398.2 million.
Aristocrat will fund the acquisition via existing cash and an incremental $US425 million seven-year Term Loan B debt facility. Moody´s said the company can comfortably accommodate such a development at its current Ba1 corporate family rating level.
fuente: SoloAzar / afr.com