The partial financial results reported by 888 Holding plc (LSE:888) six weeks ago showed that a relatively modest acquisition in December 2009 saved the online gambling company. 888 acquired online bingo company Wink Bingo for an initial payment of $18 million and promised further performance related payments at the end of the first quarter of 2011.
That time has arrived and the results have been a pleasant surprise even for 888. 888's revenue from bingo (including its own activities as well as Wink's) amounted to $14.1 million in the fourth quarter of 2010 up from $2.8 million in the corresponding quarter of 2009.
Last Friday 888 announced that because the results of Wink Bingo's acquisition were above and beyond expectations the value of the purchase will be at the maximum threshold set in the original agreement.
No sum was specified but estimates are that Wink's owners will receive an immediate payment of $15 million, a further payment of $15 million towards the end of May and an additional $10 million from 888 in August. Further payments will be made by May 2012.
The size of these payments is extremely large for a company that had cash and cash equivalents of $67 million at the end of 2010.
The large performance payments 888's owes Wink Bingo casts doubt over the possibility that Ladbrokes will buy the online gaming company.
Published by Globes, Israel business news - www.globes-online.com - on March 20, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011