Playtech extends its marketing services for operators with the “bolt-on” acquisition of mega-affiliate.
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/By Niva Goldberg /
After the group sold its 29 per cent stake in William Hill Online for £424 million in Febuary 2013, and struck a multimillion-pound deal to build Ladbrokes Digital, Playtech has announced the purchase of super-affiliate PokerStrategy in a “bolt-on acquisition” for €38.3m (About USD $50 million).
PokerStrategy founders Dominik Kofert and Enrique Guzmán will stay on at the business in a consultancy basis, and have both given personal guarantees for PokerStrategy’s existing financial obligations. CEO Damian Sokol and COO Pavel Stehno will continue in their current positions. It’s a sound move considering that Playtech’s poker revenues for the year so far haven’t been up to par with its other businesses.
In its regulatory statement, Playtech add that the deal would further diversify its business profile by opening up the world’s largest independent poker school and community to licensees.
Playtech laid out the strategy behind the deal in its regulatory news announcement (RNS): “The acquisition will allow Playtech to further diversify its business by providing licensees with access to the world’s largest independent poker community with over six million members, thereby cementing existing relationships and creating incremental opportunities for both software and PTTS marketing.”
There is a natural conglomerate logic in Playtech’s move. With its iPoker and other gaming platforms it is essentially a service provider to operators. Expanding its ability to provide them with more customers is a rational extension of its marketing services which are already extensive.
The announcement listed PokerStrategy’s 2012 pre-tax profits at €19.5 million with net assets of €16.3 million. At a 2x earnings multiple, the price Playtech has paying seemed extremely low. Even if the majority of the assets are “intangibles, ” Playtech is apparently getting a bargain.
The global affiliate marketing business has become much tougher in recent years, especially in poker, as sites switch away from discriminatory rakeback models. PokerStrategy itself has lost two major clients in the last year, including bwin.party.
“PokerStrategy.com will stay fundamentally the same and maintain its independence in the market, ” the online poker site said in a statement posted on its website. “We will continue working with all of our current partners and continue to add additional poker rooms for you to choose from, without any restrictions.”
PokerStrategy.com, on the other hand, won’t be reintroduced or rebranded into anything other than what it has been doing in the time that it’s been around. “PokerStrategy.com will stay fundamentally the same and maintain its independence in the market, ” the online poker site said in a statement posted on its website. “We will continue working with all of our current partners and continue to add additional poker rooms for you to choose from, without any restrictions.”
PokerStrategy is also expected to work closely with Playtech to help the software company upgrade its poker software as well as enhance the full breadth of the iPoker network with the intention of helping the iPoker network improve its overall poker product.
Playtech was founded in 1999 by Teddy Sagi. In 2006 it was Issued on the London Stock Exchange at a price that valued the business at approximately £550 million, and made him a billionaire worth for today about $1.8 billion.
Teddy Sagi, who spent 18 months in an Israeli prison in the Nineties, is still Playtech’s largest shareholder with a 49.5 per cent stake.
Post-tax profits at Playtech jumped by 49 per cent last year to €168m on revenues up 53 per cent at €317m.
The dividend for the year is up 41 per cent at 32.2 euro cents.
Sagi, 40, also owns several e-commerce services : an e-payment company, instant messenger service Messenger , commercial real estate and hotels in Europe.