The online casino and poker operator has acquired the independent internet and telephone betting business for £12.5 million in cash, less £1.5 million in customers\’ balances liability. 32Red hopes the acquisition will help consolidate its position in the UK market.
32Red is planning to fund the purchase, anticipated by Bookmakers Review on April 4, with a placing of 5m new ordinary shares, which will raise approximately £6.0 million, and with new bank facilities and existing cash reserves.
Bet Direct offers telephone, internet, interactive television and mobile telephone sports betting as well as internet casino, poker and fixed odds games. It has approximately 440,000 registered customers, of whom 82,000 were active in sportsbook and 11,000 in casino and poker in 2005.
In the year to 31 December 2005, Bet Direct reported an operating loss of £4.8 million from a gross win of £8 million and a turnover of £143 million. 32Red expects as part of its integration plans, which should be completed by the third quarter of 2007, to make net savings of £2.7 million in the year to 31 December 2007.
“The acquisition of Bet Direct fits the strategic objectives of 32Red extremely well providing a much enlarged customer database and the ability to offer the full portfolio of betting and gaming products through a variety of distribution channels,” said Ed Ware, CEO of 32Red.
“Our combined UK focus has enabled both management teams to identify areas of marketing cross-over, areas for review and customer recruitment and retention opportunities.”
Following the disposal of Bet Direct, Sportech announced that the sale proceeds will be used to reduce higher cost mezzanine bank debt.
“The elimination of the ITV contract and the sale of Bet Direct, two loss making activities which together incurred an operating loss of £8.9 million in 2005, enhanced further by the reduction in debt following the sale, will conclude the initial strategic objectives to restructure and reposition Sportech, providing a firm foundation for future growth,” said Sportech in a statement.
“The group now intends to focus on the strengths and qualities of its football gaming business, Littlewoods casino, poker, bingo and associated brands and games. By diversifying both its product range and its methods of distribution, the group intends to attract a wider customer base and make its games more accessible and easier to play in order to re-establish its position in the market.”
Ian Penrose, Chief Executive of Sportech said: “The sale of Bet Direct is another milestone in the strategic review of the Group and its future development. Proceeds will allow the Company to reduce debt, strengthen the Group\’s balance sheet and focus on its core profitable businesses.”
“Since the start of 2006, Sportech has terminated the Group\’s loss making contract with ITV, launched Goal Rush, an exciting new product in the Football Pools portfolio, secured new distribution channels and, now, disposed of Bet Direct. These measures position the Group to take advantage of future opportunities.”
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