GIG makes another affiliate splash

GIG makes another affiliate splash

Thursday, March 16, 2017 Posted by Scott Longley
€11m deal for Casinotopsonline biggest deal yet

Gaming Innovation Group (GIG) has completed its biggest affiliate business acquisition to date with the €11.5m buyout of Casinotopsonline.com, adding approximately 25,000 new first-time depositing players a year to its augmented affiliate business.

The deal comes hot on the heels of its last piece of M&A in the space when it bought up the assets of an unnamed affiliate business for €3.5m.

Previous to that, last year GIG’s digital marketing operation – which runs under the banner Innovation Labs - bought up Delta Markets and Magenti Media for a combine €9m.

The company said the acquisition would “significantly strengthen its position as a leading affiliate in Europe” and that adding Casinotopsonline to its Innovation Labs portfolio would “further enhance” its footprint in markets outside of Scandinavia.

GIG isn’t the only company that has been active in the affiliate space with companies such as XL Media, Catena Media and Cherry Gaming also recently involved in M&A in the area. Addressing the subject of how busy the market is, GIG chief executive Robin Reed said there was plenty of evidence of the interest in key affiliate assets but that in this instance the multiple remained attractive.

“This acquisition is our largest in the affiliate space to date and will significantly increase our traffic driving capability,” he said. “More so it was done facing stiff competition, at an attractive multiple of four based on the current revenue run-rate, excluding potential cost and revenue synergies.”

Speaking on behalf of the vendors, Mihail Todorov, chief executive at Casinotopsonline.com, said: “I am very excited about GIG taking this product further, and look forward to help them achieve the goals and vision for this unique project.”

GIG said revenues at Casinotopsonline.com are in the region of circa €3m and with EBITDA margins that are close to 90 percent. GIG expects to increase revenues in the short term by about 25 percent and with “significant long-term potential.” The Casinotopsonline offering will now be integrated with Innovation Labs’ own proprietary systems.

The acquisition will be funded by the cash raised by the bond issue undertaken by GIG in late February which raised SEK400m (€42m). GIG said then that the bond would be used to acquire further assets particularly in terms affiliates. Redd said at the time the bond would allow the company to increase its traffic-driving capability to its “rapidly expanding eco-system.” “More volumes will benefit all the stakeholders with advantages of scale,” he added.

Separately, GIG’s backend supply division iGamingCloud announced this week its latest launch on the platform with LarryCasino.com, a new offering based on the ‘Leisure Suit Larry’ video game character from the 1980s.

Totally Gaming says: Given the scale of the GIG bond issue and the price paid for this latest acquisition, it seems clear that more deals involving Innovation Labs will be in the offing. However, that comment regarding “stiff competition” should be noted; prices in the affiliate space are on the rise and it will be interesting to see what is said about valuation multiples in future deals involving not just GIG but also the other actives companies in the space such as Catena, Cherry and XL Media.

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