PartyGaming Buys CashCade
Leading listed online gaming operator PartyGaming has purchased CashCade Limited for up to $158.82 million in a move that will significanly increase its share of the $1.5 billion global online bingo market.
British firm CashCade is the largest provider of online bingo entertainment to UK-based players with leading brands such as FoxyBingo.com, MirrorBingo.com, ThinkBingo.com and CheekyBingo.com while Gibraltar-based PartyGaming operates popular poker domain PartyPoker.com.
Rumours of the deal have been circulating for weeks with PartyGaming revealing that it will initially pay $119.06 million for the London-based bingo and casino operator and up to a further $39.74 million subject to CashCade's future profit performance.
The acquisition, which is being financed by existing cash, is PartyGaming’s first since its settlement with the US Department Of Justice in April that saw it agree to pay $105 million in return for not being prosecuted for providing Internet gambling to customers in the US before 2006’s Unlawful Internet Gambling Enforcement Act. Jim Ryan, Chief Executive Officer for PartyGaming, stated that the deal would provide his firm with ‘an excellent platform to build a meaningful share of the $1.5 billion global online bingo market’.
'Our longer-term strategic objective is to become the market-leader in online poker, casino, sports and bingo,' said Ryan.
CashCade's earnings before interest, tax, depreciation and amortisation more than doubled to $20.19 million in 2008 from $8.11 million a year earlier while its net revenues increased to $74.32 million from 47.18 million. The operator is partially owned by debt-laden newspaper publisher Independent News And Media, which will receive $21.79 million for its stake after costs. It may also receive incremental proceeds in 2010 and 2011 subject to certain earnings targets being met.
The deal sees PartyGaming's share of the global online bingo sector increase to around six percent while it will possess a 23 percent stake of the UK market, which is estimated to be worth $410 million.