Cherry aims for profit after Almor purchase

Cherry aims for profit after Almor purchase

Thursday, July 2, 2015 Totally Gaming
Fredrik Burvall sees German-speaking markets as an opportunity

Gaming operator Cherry hopes to achieve profitability in this quarter after announcing the acquisition of online casino business Almor.

The Swedish company has paid €4.6m ($4.15m) for 71 per cent of the operator that targets German-speaking markets and will immediately see its revenue consolidated within group accounts.

Cherry president and chief executive Fredrik Burvall told that the addition of Almor – which had net gaming revenue of €11.1m and profit of €1.2m in 2014 – will be a boost to the company’s balance sheet.

“We are committed to achieving profitability as quickly as possible and we will do this both by organic growth and through acquisitions,” Burvall said. “We expect profitability in Q3 within the online gaming business division.

“Almor is a very successful online casino business and the acquisition gives Cherry an even stronger footprint in Germany and other German-speaking markets.

“We’re excited about the potential of mobile with Almor’s brands. We have strong mobile products and we will be focusing strongly on this.

“In time we will also look into other synergies and evaluate the best technology platform for Almor going forward. We believe there are a number of synergies which will increase the profitability even further.”

Cherry saw group revenue increase by 31 per cent year-on-year to SEK95.3m in the first quarter of 2015, with EBITDA at a loss of SEK4.5m. Online gaming revenue stood at SEK58.3m in Q1 2015 with EBITDA at a loss of SEK5.7m.

Cherry, which already holds all currently available online casino licenses in Germany, will now absorb Almor’s principal brands Sunmaker, Sunnyplayer and Kingplayer, which had more than 55,000 active customers in the first five months of 2015. Almor has generated net gaming revenue of €5.9m and an EBITDA of €800,000 so far this year.

Cherry has the right to buy the remaining part of Almor within the next four years and eight months. Payment of the initial purchase price will be made 50 per cent in cash and 50 per cent in Cherry shares.

“We’ve been impressed with the growth Almor have achieved over the past few years and we’ve identified German speaking countries as key markets for us moving forward,” Burvall added. “We feel there are strong opportunities there and we believe this is an excellent deal for both parties.”

The company also believes it will be aided by its purchase of affiliate and SEO business Game Lounge earlier this year, and Burvall says that more deals could be in the pipeline.

“We’ve been delighted with the acquisition of Game Lounge earlier this year and we have equally high hopes for Almor,” he added.

“I can’t rule out any further acquisitions in the next few months, but we judge each case on its merits. If there are companies out there that can help Cherry grow, and where we can add value to the business, we will certainly talk to them.”

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