888 buys Mandalay bingo portfolio for £18m
JPJ says the deal for brands including Costa Bingo will help it focus on its core Jackpotjoy brands in the UK
888 has announced a deal to buy the Mandalay portfolio of online bingo brands, including Costa Bingo, from JPJ Group at a cost of £18m.
Under the terms of the deal 888 will pay £12m cash on closing of the acquisition, with the remaining £6m to be paid in September 2019.
Other businesses included in the acquisition include Sing Bingo, City Bingo, Costa Games, Slot Crazy and Fantastic Spins.
All the brands included were previously operated as B2B brands on the 888 Dragonfish bingo platform, but after completion 888 will operate these businesses on a B2C basis.
Mandalay generated approximately £11m of revenue and £3.7m of profit before tax in the twelve months to 31 December 2018, meaning the sale price represented around 4.9x earnings.
Specific growth rates for Mandalay were not broken out in JPJ’s Q3 results, but the firm noted it declined.
Itai Pazner, chief executive officer of 888, said: “Consolidating these brands into our existing B2C portfolio will deliver synergies and growth opportunities by applying the full extent of 888’s core capabilities in product, marketing and customer relationship management to their operations.”
Analyst firm Regulus Partners called the acquisition a “principally defensive” move by 888 as it risked losing the B2B contract if another firm acquired Mandalay.
Regulus added: “JPJ has got rid of an underperforming asset it had little control over and little hope of turning around, in our view, for not a bad price.”
Shares in 888 rose by 0.17% following announcement of the deal, with shares trading at 172.30p at the time of writing.
JPJ said the sale would enable it to to concentrate on a “more focussed brand strategy in the UK through Jackpotjoy” and optimise ROI on its marketing investment.