Playtech Cyprus Ltd. (AIM:PTEC), controlled by Teddy Sagi, today announced the acquisition of Geneity Ltd. for £11 million and the establishment of two joint ventures in South Africa and Germany. The company also reported strong growth estimates for the fourth quarter and full year of 2011.
Geneity is a London-based developer of e-gaming software products for bookmaking and lotteries, which was founded in 2006. £4 million of the price will be held in escrow for 30 months, and an additional £4 million will be paid to Geniety, subject to milestones. The company's bookmaking software customers include Gala Coral, a customer of Playtech, Betfair Group plc (LSE: BET) and Ladbrokes plc (LSE: LAD). Geneity provides its lottery software to Britain's Health Lottery. The company had a pretax profit of ₤820,000 on £2.3 million in the year through March 2011.
Playtech said that the acquisition was strategic, because it provides the company with a "modern, proven, robust and scaleable sports betting platform as well as lottery capabilities". Geneity's sportsbook product will replace Playtech's product and the company expects to achieve cost savings through the replacement. The company added that there are opportunities to integrate Geneity's products with the mobile sportsbook platform of Mobenga, which Playtech acquired last year.
Playtech's South African joint venture is with Peermont Group Ltd., the country's leading gaming and casino company. The companies will own the joint venture in equal shares. It will initially offer bookmaking, and will expand to provide gaming products, following changes in South African online gaming regulations. Playtech will provide the venture with its PTTS turnkey solution. Peermont owns seven casino casino licenses in South Africa and three in Botswana. Its gaming revenue totaled 2.7 billion Rand (€260 million) in 2010.
The German joint venture is with Gauselmann Group AG's online division, Merkur Interactive GmbH. The venture, in which Playtech will own 49.99%, was set up to seize expected gaming and sports betting opportunities from revisions to Germany's Interstate Gambling Treaty regulations for online gaming. Gauselmann is one of Europe's largest gaming companies, with more than €1.5 billion revenue in 2010. Playtech will provide the joint venture with German products from its PTTS solution.
Playtech's gross revenue rose 41% to €243.6 million in 2011 from €173.1 million in 2010, and its total revenue rose 46% to €207.5 million from €142.3 million. Its fourth quarter revenue rose 79% to €69.6 million for the corresponding quarter of 2010. Playtech had €137.3 million in cash at the end of 2011, after paying €83.3 million for PTTS, IGS, Mobenga and Ash Gaming during the year.
Playtech added that its daily activity for the first 22 days of January was 25% higher than in the corresponding quarter of 2011 for software royalties. Services revenue are in line with expectations.
Playtech CEO Mor Weizer said, "Playtech has again delivered a robust fourth quarter performance." He added, "Growth from our existing business has created a solid platform for 2012… I believe Playtech is well positioned to take advantage of market opportunities wherever as and when they appear. It is clear that there is continuing momentum towards regulated gaming in Europe, with Denmark recently launched in regulated form, and both Spain and Belgium due to regulate this year. The US Department of Justice's pre-Christmas guidance has provided further encouragement for those looking to achieve regulation in the US."
Playtech's share price opened at ₤3.01 in London today, giving a market cap of ₤871 million.
Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2012
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