888 agrees £18m deal to acquire JPJ's Mandalay business

19 February 2019

888 Holdings has agreed a deal to acquire JPJ Group's Mandalay operating business, including the Costa Bingo brand, for a cash consideration of £18m (€20.6m/$23.3m).

The London-listed operator will acquire a range of bingo assets from Jet Management Group and Jet Media. These holding companies form the Mandalay operating unit, named after Mandalay Media, from which JPJ, trading under the Intertain brand, acquired the bingo assets in 2014. 

888 has worked closely with the Mandalay brands since 2009, supplying its Dragonfish bingo platform to Mandalay Media, then JPJ Group. For the twelve months to December 31, 2018, the Mandalay operating unit generated revenue of £11m, and profit before tax of £3.7m. 

Itai Pazner, chief executive of 888, said the acquisition of the brands will further strengthen the group’s position in the UK online bingo market.

“The group continues to deliver its stated strategy of expanding across global regulated markets,” said Pazner, who was last month confirmed as 888’s new CEO after Itai Freiberger stepped down from the London-listed operator. “This expansion is underpinned by organic growth initiatives supported by exploring value-enhancing M&A.

“Having been developed on Dragonfish, the Group’s first-class B2B platform, we are confident that consolidating these brands into our existing B2C portfolio will deliver synergies and growth opportunities by applying the full extent of 888’s core capabilities in product, marketing and customer relationship management to their operations.”

888 will pay an initial £12m in cash on closing of the acquisition, followed by a further £6m in cash by September of this year.

JPJ Group said the sale would allow it to develop a single-brand strategy in its core UK market, based around its flagship Jackpotjoy brand, which would optimise returns on marketing investment.

However, analysts at Regulus Partners have questioned the acquisition, citing Mandalay’s underperformance in recent JPJ results, with revenue down 24% per year since 2015 in what they describe as a “relatively buoyant" bingo market.

Regulus identifies the purchase as a “principally defensive on 888’s part”, noting that JPJ has got rid of an underperforming asset “it had little control over and little hope of turning around”.

The deal is expected to close by the end of March, once an employee consultation process is concluded.

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