Chinese Action For Bet On Sports
Published: Tuesday, May 23, 2006 Online-Casinos.com
CHINESE ACTION FOR BET ON SPORTS
Easybets infrasytructure in Malaysia to handle new China facing acquisitions
Multi million dollar deals featured on Bet On Sports's landscape this week
as the group moved its Asian aspirations up a gear.
The London listed company Bet On Sports (BoS) announced its acquisition of China facing sportsbooks
Hooball and 777ball, effectively doubling its Asian market presence.
Wholly Internet based with a principal customer content in Guangdong and Zheziang
provinces, Beijing and Shanghai, sportsbook activity largely centres on football
and basketball. The business will be fully integrated into the existing Easy
Bets operating structure in Malaysia to deliver enhanced management control,
cost savings, improved processing channels, additional key personnel skills and
product diversification across all of the groups Asian brands.
The initial purchase price of US$22 million will be satisfied on completion of
the acquisition through US$10 million in cash and the issue of 3,859,089 ordinary
shares of 1p each in the capital of BoS. Deferred consideration of up to US$16
million has been agreed, to be paid in cash depending on the profitability of
the business in the year after completion. The maximum total purchase consideration
for the business is US$38 million.
The acquisitions are in profit, a company spokesman confirmed, revealing that
the historic profit before tax to 31 December 2005 was US$3.6 million. The current
rate of gross handle is approximately $120 million per annum, in respect of two
sportsbook brands, but including exchange betting of $8 million per annum; additionally,
there is a new casino, which commenced operations in March 2006, with an initial
gross handle of $5 million in that month.
During the 15 months ending 31 March 2006 the business had 28,274 sign ups, 40
percent of which were real money sign ups with deposits. Active clients between
January 2005 and March 2006 remained relatively stable at approximately 6,500
a month.
Because the new acquisitions are to be integrated into the existing Easy Bets
operation, the earnout period agreed with Tim Lambe, Managing Director of Easy
Bets, upon acquisition of Easy Bets in May 2005, has been extended from three
to five years. Adjustments have also been made to the cost base and percentage
entitlement to profits above a minimum level in year 3 of the earnout which extend
to years 4 and 5 such that the cap on total consideration for the Easy Bets acquisition
is now US$40 million compared to the original US$32.5 million.
BoS CEO David Carruthers said: "This acquisition is not merely earnings
enhancing. We see China as a “must-be-in market” and with Hooball and
777ball consolidating our Easy Bets presence, our first mover advantage is significantly
increased. The diversification of revenue streams away from the US further mitigates
the seasonality of activity in our US facing business.
“These brands meet our criteria of proven profitability, territorial expertise,
straightforward IT integration and robust processing channels combined with effective
risk management. We strongly anticipate that the benefits of integration with
Easy Bets in terms of cross selling, marketing, skill sets and cost savings will
rapidly become apparent. Immediately prior to a World Cup doesn’t look like
the worst of times to be acquiring such a strongly soccer-centric sportsbook.”
Max Hsiun, former CEO at Hooball and now Easy Bets’ Business Development
Manager commented, “I am delighted to be part of the BoS Asian plan and teaming
up with a quality brand like Easy Bets with its resources and reputation can only
be good for the long term future and the successful development of the Hooball
business.”
