Brexit shockwaves not holding back Cherry investment

Brexit shockwaves not holding back Cherry investment

Wednesday, July 6, 2016 Posted by Andy McCarron
Fredrik Burvall is pleased at the appetite for investment in Cherry

Fredrik Burvall, CEO of Scandinavian operator Cherry AB, says the reaction to the firm’s 50m euro bond has been ‘hugely encouraging’ and underlines the market’s confidence in the company’s plans for growth, especially given the market turmoil caused by the UK’s Brexit vote.

The money raised by the four-year senior secured bond is to be used to finance Cherry’s partial acquisition of fellow Scandinavian company ComeOn.

Burvall told “The finalisation of the acquisition of ComeOn will significantly strengthen Cherry’s position in Scandinavian markets. The acquisition also provides great opportunities for continued international expansion and we expect the first 49 percent to be finalised during July 2016.

“The interest already expressed in the bond has been hugely encouraging, especially at a time of some economic uncertainty in Europe. The Nordic investment bank ABG Sundal Collier has said that this bond issue is only the second transaction of its type to close in Europe since the UK's vote to leave the European Union, so it is clear that investors see Cherry very positively at the moment. There is strong belief in the strategy we’ve laid out at Cherry and receiving this type of financial support makes it considerably easier to execute.”

Burvall said that ComeOn will significantly strengthen Cherry’s hand in the core markets. He explained: “ComeOn has established operations in European markets where Cherry is not currently an active participant, which is a major boost. ComeOn shares a similar company culture, boosts us in the sports betting vertical and fits well with our multi-brand strategy.

“We believe that ComeOn’s in-house knowledge can help accelerate Cherry’s growth into new products and markets. Adding very efficiently functioning teams to Cherry will support our group’s positive momentum.”

Burvall also promised more synergies in terms of economies of scale, with Cherry able to reduce costs as well as distribute current resources and costs more efficiently throughout the organisation, including COGS, IT CAPEX and marketing.

Cherry’s shopping spree doesn’t appear to be coming to an end any time soon either, although Burvall said the conditions would have to be right for the company.

“Strategic acquisitions are a central pillar of our growth plan so I certainly wouldn’t rule out further acquisitions down the line. Of course, any potential acquisitions must be right the fit and price for Cherry. We are growing organically at a pace well above the market, so we are not under any pressure to make big moves for the sake of it.

“We have the luxury of biding our time knowing we can move quickly if the right opportunity presents itself. With new regulation approaching in Sweden mid-2018 and a few other European jurisdictions, scale will be important to best cope with new local regulatory burdens. We are in a great position and are confident heading forward.”

Totally Gaming Says: “The large interest among Nordic investors for the bond issue, despite challenging market conditions, is a huge fillip for Cherry’s acquisition plan and suggests that the market sees the ComeOn acquisition favourably, even excitedly. Cherry will no doubt be keen to finalise the acquisition of the remaining 51% of the company during the Q4 window it has been given to complete.”

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