LeoVegas Acquisitions

LeoVegas has during the past two years combed the gaming market in search of companies that fit in with the overall expansion strategy, which is to grow in regulated markets and markets that will soon become regulated.

The M&A process is run by LeoVegas AB and the ultimate responsible is Group CEO, Gustaf Hagman.

M&A Team

In our growing industry, there are fantastic opportunities. Finding interesting acquisitions that fit the Group’s strategy and culture is such opportunity. Due to this we have, in my opinion, built the industry’s strongest M&A team, and together with a strong balance sheet and extra funding, LeoVegas is an interesting buyer in the continued consolidation, comments Gustaf Hagman, Group CEO

Royal Panda - 24:e October 2017

The acquisition of Royal Panda strengthens LeoVegas expansion in regulated markets, especially in the UK, and also add a strong and exciting brand to the LeoVegas Group. Royal Panda has a proprietary technical platform focused on casino but they also have a sportsbook and sports offering. At the time of the acquisition, the company had approximately 60 employees and its head office is located in Malta. 50 percent of Royal Panda’s revenues is generated from the UK. The remaining share comes from other Europe and rest of the world. 65 percent of the revenues are generated from mobile devices.

The acquisition gives the LeoVegas Group two great global brands, making the scalability of continued growth tremendous. The acquisition of Royal Panda is in line with LeoVega’s strategy to continue to grow on regulated markets.

The acquisition is being made for a purchase price of EUR 60 m with a possible earn-out payment of an additional EUR 60 m. The total purchase consideration can thus amount to a maximum of EUR 120 m.

In order for Royal Panda to be entitled to the maximum earn-out, the company must achieve:

– At least EUR 50 m in Net Gaming Revenue (NGR)

– EBITDA of at least EUR 15 m

– At least EUR 34 m of NGR must be derived from the UK

– EBITDA from the UK must amount to at least EUR 5 m.

With the acquisition of Royal Panda, LeoVegas can now leave the short-term financial targets for 2018 since the targets were set without taking any major acquisitions into account. The long-term goals can be found in the LeoVegas financial report for the third quarter of 2017.

Winga.it - 21:a February 2017

Winga.it was LeoVegas first acquisition in the company’s history. Winga.it was an Italian gaming operator licensed for the Italian market. The acquisition gave LeoVegas an established position in Europe’s largest regulated gaming market – Italy. Winga.it has been re-branding into LeoVegas and today LeoVegas is the brand that is marketed in Italy.

LeoVegas acquired 100 percent of the company as 2016 had revenues of 8.0 MEUR.

The purchase was made with a cash purchase price of 6.1 MEUR. Which was subsequently adjusted to approximately 5.5 MEUR.

Seller of Winga was PAF (Ålands Penningautomatförening)

Financing

LeoVegas has a strong balance sheet and positive cash flow.

The acquisition of Winga was made with existing cash.

LeoVegas has a strong cash position that was used for the initial purchase price of Royal Panda. But in conjunction to the acquisition and in order to act on future acquisition opportunities, the LeoVegas Group has obtained debt financing of EUR 100 million, of which EUR 40 million constitutes a revolving credit facility.

The financing has a term of three years, and amortisation will commence in the second quarter of 2019 in the amount of EUR 10 m quarterly. The interest rate on financing is approximately 2 percent.

The debt financing ensures that LeoVegas is able to take part in the consolidation within the industry.