Major Skill Games Company Changes Hands
Published: Wednesday, November 23, 2005 Online-Casinos.com
MAJOR SKILL GAMES COMPANY CHANGES HANDS
51 percent interest of FUNTech goes for US$ 195 million
FUNTech, the successful Canadian company started three years ago by Cryptologic founder Andrew Rifkin and young business entrepeneur Lorne Abony has become the focus of the latest big online gambling industry deal with the announcement that Liberty Media is to acquire a 51 percent interest for US $ 195 million.
The purchase represents a 40 percent premium on the share price last week.
Liberty Media is a US company with a number of large cable and Internet business interests, and the news sent FUN stock on the Toronto exchange up by 12 percent. Lorne Abony as the current CEO has agreed to remain with the company for the next three years and will exchange his FUN stock for about eight per cent ownership in the new company, making him its second-biggest shareholder after Liberty Media.
Fun Technologies provides online skill games to many well-known companies such as AOL and MSN, and runs an interactive television game-show service for GSN, a U.S. cable-TV channel co-owned by Sony and Liberty Media, which also owns the QVC Inc. shopping network and other companies.
Under the multi-stage deal, Liberty, based in Englewood, Colo., will invest US$ 50 million in FUN by purchasing 10.5 million of its common shares directly from its treasury, and in the second part of the deal, Liberty will issue a tender offer to buy 23.2 million existing shares at 360 pence to take its total ownership in a recapitalised FUN to 51 per cent.
Abony said that his company currently employs 200 people in Toronto, and a further 80 at its Los Angeles offices where most of the operating activity on behalf of customers is carried out.
"We're the market leader in two of the fastest-growing sectors in online gaming, namely skill gaming and fantasy sports," Abony said in an interview.
Skill gaming involves wagering cash on any game that's not a game of chance or luck - games like chess, checkers, solitaire, spelling games. About two-thirds of the nine million registered users of FUN's skill games are women who "...profile very similar to somebody who does scratch-win lottery tickets," Abony said.
Fantasy sports teams, which have been an amateur pastime for years but only recently an online business, allows enthusiasts to pick real-life pro athletes for their dream teams and track their progress throughout a season or tournament."We provide real-time injury report on your phone and we provide real-time scoring and data," Abony said.
The alliance with Liberty Media will allow Fun to move beyond the Internet in a big way, as evidenced by its success in developing an interactive, real-time system of the TV game show Lingo for GSN, Abony said. "Lingo exploded and became our second-largest customer. It's proof that this business model really works," Abony said.
Liberty Media sees "participation TV" as an opportunity to combine its cable assets with Internet gaming.
"From my perspective, the business is just hitting its inflection point. It's just starting to boom," Abony said. "This business, I think, is in its infancy."
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