Acquisition of eBet

RNS Number : 9755T

Sportech PLC

20 December 2012

Sportech PLC

Earnings Enhancing Acquisition Extends Sportech's Reach in US Gaming Market

Acquisition of eBet, a Leading Provider of Internet and

Mobile Betting Services for Horseracing in North America

The Board of Sportech PLC ("Sportech" or the "Company") is pleased to announce the acquisition of eBet Online Inc ("eBet"), a leading US business to business ("B2B") online betting operator and technology and services provider focused on the North American horseracing betting market. Total consideration, dependent upon future performance, is to be up to $12.6m (approximately £7.8m).

The acquisition is expected to be earnings enhancing in its first full year of ownership.

Rationale for the acquisition

eBet is one of the largest online horserace wagering operators in the US, processing $106m of bets through its account wagering systems in the year to 30 June 2012.

The acquisition of eBet reinforces Sportech's position as one of the largest operators and providers of online and mobile betting technologies and services across North America. The combination of eBet with Sportech's US interactive business is expected to create significant strategic and operational synergies. eBet brings an incremental customer base with strong year-on-year revenue growth that will broaden Sportech's share of the account betting market in North America.

Following the acquisition, Sportech's enlarged US interactive operation will provide customised websites, mobile applications, interactive voice response (IVR) systems and telephone betting services to 29 licensed gaming and racing customers across the US.

In addition to its betting technologies, Sportech will continue to provide its customers with a comprehensive package of services designed to maximize wagering revenue, including full-service marketing, content management and end-user customer service and technical support.

Under the terms of the acquisition, Mark Gregory, a principal and the current CEO of eBet, will assume the role of Managing Director of Sportech's Interactive Products & Services division. Andrew Gaughan, the current Managing Director of the division, will become Managing Director, Business Development - The Americas. Both Mark and Andrew will report to David Schreff.

Key financial information

For the year ended 30 June 2012, eBet reported turnover of $4.3m producing an EBITDA before exceptional items of $1.6m and a profit before tax and exceptional items, of $1.4m. Gross assets at 30 June 2012 were $2.3m. Sportech has identified a total of $250,000 of synergies it would expect to achieve in 2013 increasing to annualised synergies of $500,000 from 2014 onwards.

Acquisition consideration

Sportech has agreed to acquire eBet for a total consideration of up to $12.6m (approximately £7.8m), to be funded from Sportech's existing banking facilities. This comprises an initial consideration of $9.35m in cash, deferred cash consideration of $1.5m, payable in two tranches, ($0.4m one year and $1.1m two years after completion); plus a further deferred payment of up to $1.75m in cash payable in the event that Sportech's enlarged interactive division in the United States meets certain growth performance targets in the year to 31 December 2015.

Commenting on the acquisition, Ian Penrose, Chief Executive of Sportech, said:

"The acquisition of eBet is an important further development in our North American business, following approval last week to provide exclusive online betting on horseracing in the State of Connecticut and the recent appointment of David Schreff as Chief Operating Officer - The Americas.

eBet brings Sportech a significantly enlarged online customer base, a licence in Oregon and an experienced new Managing Director for our interactive division. The addition of eBet significantly enhances our reach across horseracing in the United States.

The acquisition is earnings enhancing in 2013, and we look forward to building upon this firm base."

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Contacts:

For further information, please contact:

Sportech PLC

Ian R Penrose, Chief Executive 020 7268 2400

Pelham Bell Pottinger

David Rydell / Emma Kent 020 7861 3232

This information is provided by RNS

The company news service from the London Stock Exchange

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