Swedish online gambling provider Cherry AB reported it has exercised its option to buy the remaining 51% of shares in the Maltese casino and sports betting operator ComeOn. The acquisition of the remaining shares, combined with the company’s substantial organic growth, is expected to result in Cherry’s tripling its revenues and becoming the third biggest private sector gaming company on the Nordic markets. Additionally, this will serve as a basis for Cherry’s continued international expansion with other leading brands in the industry.
The acquisition is scheduled for completion in the first quarter of 2017 and comes after the Swedish company took 49% in ComeOn shares this past July at the cost of €80 million. The overall price of the purchase is to be based on a multiple of ten times ComeOn’s operating profit (EBIT) for the full year of 2016. The sum of €80 million Cherry paid in July is to be deducted from the final purchase price which is expected to reach no more than €280 million on a debt-free basis.
Fredrik Burvall, President and Chief Executive of Cherry, revealed the company was close to finalizing the acquisition of ComeOn which would considerably strengthen its position on the market. Burvall disclosed plans on creating “an entrepreneurial-driven gaming company where both Cherry and ComeOn have significantly stronger organic growth.”
He went on to say the deal will lead to Cherry’s increasing its sports betting revenues as well. Burvall concluded by stating the company is already boasting a rather diverse income stream from “five different business areas along the gaming value chain.”
Cherry plans on securing the remaining ComeOn shares via a combination of 40% in new B-shares and 60% in cash. Cherry also reported the value of the new shares will be determined on the basis of the volume-weighted average share price for its shares in the fifteen calendar days from December 12 to December 26.
After the acquisition comes to a completion, Cherry is expected to generate a revenue ranging between SEK 2.6 billion and SEK 2.7 billion in the full year of 2017. The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to come between SEK 550 million and SEK 600 million in 2017.
The acquisition is to be approved at a meeting that is to take place in February, next year, when ComeOn’s 2016 results will be finalized. The independent Nordic investment bank ABG Sundal Collier has assumed the role of Cherry’s financial adviser while the Nordic law firm Roschier Advokatbyrå has provided legal advice for the Swedish company.
