BOSPLC Acquires Two Chinese Sportsbooks in China
BETonSPORTS plc, one of the world’s largest US and Asia-facing online gaming companies, announces the acquisition of China facing sportsbooks Hooball and 777ball. The addition of these brands effectively doubles BETonSPORTS’ Asian market presence.
100 per cent Internet based with a principal customer base 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 BETonSPORTS plc’s Asian brands.
The initial purchase consideration and the value attributable to the assets, of US$22 million, will be satisfied on completion of the acquisition as to US$10 million in cash and the issue of 3,859,089 ordinary shares of 1p each in the capital of the Company (the “Consideration Shares”*). 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 historic profit before tax to 31 December 2005 (unaudited) of the business being acquired was US$3.6 million. The current rate of gross handle is approximately $120 million (RMB1,000 million approx) 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% of which were real money sign ups with deposits. Active clients (being unique customers wagering in a month) between January 2005 and March 2006 remained relatively stable at approximately 6,500 a month.
Since the business will be fully integrated in to 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 (of which US$15 million was paid as initial consideration).
David Carruthers, Chief Executive of BETonSPORTS plc, 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, territory 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 BETonSPORTS’ 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.”
