Social Gaming: IGT to sell Double Down for $825 million

Social Gaming: IGT to sell Double Down for $825 million

Wednesday, April 19, 2017

International Game Technology (IGT) has signed a definitive purchase agreement to sell its social casino subsidiary, Double Down Interactive, to an affiliate of DoubleU Games Company, a social casino operator headquartered in South Korea.

The cash purchase price of $825 million represents more than 10 times Double Down’s full-year 2016 adjusted EBITDA.

Upon the closing of the sale, the parties will enter into a game development, distribution and services agreement, which will enable DoubleU to offer IGT’s extensive casino game library its social casino platforms, in exchange for ongoing royalties to global slots giant.

“This transaction represents a unique and value-accretive partnership combining the operational excellence of DoubleU Games with IGT’s world class slot content,” said Ga-Ram Kim, CEO of DoubleU Games.

IGT bought Double Down for approximately $500 million in 2012. The studio had just 70 employees five years ago, but since that time it has grown to become one of the world’s leading social casino brands that rode the wave of popularity enjoyed by free-to-play online games.

Enriched with IGT’s wide range of iconic slot brands, Double Down’s play-for-fun solution is monetised by selling virtual coins for real currency. However, social gaming initiatives are also often used as a way of tapping into non-gaming markets whilst also providing consumers with a ‘soft entry’ into real-money gambling.

“Since acquiring DoubleDown in 2012, IGT has grown it into one of the largest and most successful brands in the North American social casino market,” said Marco Sala, CEO of IGT. “After several years of strong, organic growth and increasingly attractive valuation levels, the time is right for us to maximise the value of this asset for our shareholders.”

From a purchase-to-sale price perspective, the deal is a positive one for IGT. And while Double Down has remained a key contributor to the group’s balance sheet since it acquired the studio, the company cited “fewer daily active users” in its social gaming venture as one reason for the 14% dip gaming service revenues in the fourth quarter of last year.

IGT, which acquired a leading rival, Gtech, for $4.7 billion in April 2015, said it would use the proceeds of the Double Down sale for “general corporate purposes, including debt reduction”.

Totally Gaming says: IGT’s purchase of Double Down in 2012 attracted controversy from some within industry who saw no future in social gaming. Over the past five years, however, the group has proved the detractors wrong, as the studio developed into one of the world’s biggest social gaming brands. IGT’s priorities might have shifted in the wake of its merger with Gtech, but the group has made it clear that, through its partnership with DoubleU, players will still have access to its extensive game library and leading social gaming platform.

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