David Williams | 31 Oct 2017
Leading Sweden-based mobile casino operators LeoVegas has set its sights on UK-facing online casino brand Royal Panda. LeoVegas released a statement in which it confirmed it had penned a deal that kicked off the acquisition process it hopes will be completed by the beginning of December.
Mobile casino operator CEO Gustaf Hagman described the move as an important acquisition for LeoVegas. According to Hagman, the online casino’s animal mascot has powerful value as a symbol, and was partly responsible for players’ appreciation of the brand.
He added that the mobile casino operator will soon be able to lay claim to not one but two brands with an appeal that reaches around the globe.
In terms of the acquisition deal, LeoVegas is required to pay €60 million upfront. An earn-out payment of the same value is possible, if specified conditions are met.
Among those conditions are the generation of at least €15 million in earnings and a minimum of €50 million in revenue within the first 12 months of the completion of the acquisition. At least €5 million of those earnings and at least €34 million in revenue will need to come from the UK market.
Hagman said the initial payment would be financed from the operator’s healthy cash position, although it had also received €100 million in debt financing for future acquisitions.
The beginning of the Royal Panda acquisition was not the only good news to come out of LeoVegas recently. The mobile casino operator posted its Q3 financial report showing a 40 per cent increase in revenue for the same period year-on-year.
According to the report, the operator raked in a staggering €55.6 million, with more than 25 per cent of those revenues coming from markets regulated locally. However, the report also showed that earnings dropped by slightly more than 22 per cent to €7.6 million, while operating profits dropped by more than 26 per cent to €6.9 million.
The operator claimed high taxes and steep marketing expenses ate into its earnings and operating profits. It was also in Q3 that the operator ceased it Australian operations, although the financial impact of that move had not yet been felt. More than €5 million of its 2016 revenue had been contributed by those operations.
LeoVegas got Q4 off to a good start. The operator said the first three weeks of October had already seen a 70 per cent increase in revenue from the same period last year.
This was the year in which Royal Panda came into its own. Earlier this year, the online casino announced the launch of its new online and mobile sportsbook powered by BetConstruct, as well as its official sponsorship of Queens Park Rangers FC.
More than half of the online casino’s €3.2 million earnings and €9.8 million revenue in Q3 was generated in the UK. Conversely, the country contributed only 12 per cent of LeoVegas’ Q3 revenue.