Gaming Realms offloads Bear Group to River iGaming

22 February 2019

Mobile games developer Gaming Realms has agreed to sell its B2C subsidiary Bear Group to River iGaming for a total consideration of £11.5m (€13.2m/$15.0m).

The deal also sees Gaming Realms grant River iGaming’s River Technologies subsidiary a sole perpetual licence to its real-money gaming platform, as well as sell its 30% residual stake in River UK Casino.

Per terms of the agreement, the cash consideration for all of the transactions includes the settlement of the contracted deferred consideration of £4.2m owed by River UK Casino to Gaming Realms.

Last June, River UK Casino agreed to purchase certain real-money gaming brands from Gaming Realms, including Pocket Fruity, Spin Genie, Britain’s Got Talent Games and X Factor Games. After the deal went through, River iGaming held a 70% stake in River UK Casino, with Gaming Realms retaining a 30% share.

However, Gaming Realms has now stated that it does not believe River UK Casino will meet its EBIT target of £2.2m for the 12 months to June 30, 2019, in order for the company to gain any further deferred consideration in connection with the River UK Casino acquisition deal.

Last year, the Bear Group and the real-money gaming platform featured in the deal generated £8.8m in net gaming revenue, as well as £500,000 in EBITDA.

Should the new deal secure the relevant approvals, River iGaming will pay an initial £5.5m on completion, followed by a further £1.5m on or before December 31, 2020.

Malta-based River iGaming, which was founded in 2017, will also pay £4.5m for the sole perpetual licence and the real-money gaming platform, which includes a £3,000 payment for the stake in River UK Casino. Gaming Realms noted that River UK Casino has repaid a working capital loan of £900,000 in relation to the earlier acquisition.

The developer said it will use funds from the sale of Bear Group to support the development of new games, its remote gaming server and worldwide licensing efforts, as it pivots to a B2B focus.

Gaming Realms will retain the Slingo brand and Slingo.com domain, but both will enter a white label agreement with River iGaming upon completion of the deal. This will enable Slingo to continue to operate on the Bear Group gaming platform.

“The new UK regulatory environment, together with increases in Point of Consumption tax, has made it increasingly difficult to operate a sole UK facing casino and real money platform,” Gaming Realms CEO Patrick Southon said. “However, the acquisition of the Slingo brand and IP in 2015 has enabled the Company to become a highly regarded developer and licensor of games in the international gaming market. This is a high growth market and one that the Board believes can be further developed for the benefit of shareholders.”

Meanwhile, Gaming Realms has published an update on its current trading performance, saying results for the 2018 financial year are expected to show revenue and adjusted EBITDA in line with market expectations.

The developer said as a result of the sale of Bear Group, it will be able to focus fully on the development and licensing of proprietary online games, which had proved successful in generating revenue in 2018. For the first six weeks of 2019, revenue was running 118% above the daily average of the previous year.