Cherry picked Game Lounge forms vital part of enhanced Group

Cherry picked Game Lounge forms vital part of enhanced Group

Wednesday, January 3, 2018 Posted by Craig Davies
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Swedish gaming firm now owns 95% of the affiliate company

Cherry AB has exercised its option to purchase further shares in affiliate company Game Lounge Ltd, almost three years after acquiring a majority stake in the firm.

Cherry Malta Ltd, a Cherry AB wholly owned subsidiary, acquired 51% of Game Lounge in January 2015, and under terms set out in that original agreement has now taken up the option to purchase an additional 44% of its shares.

Anders Antonsson, head of IR & communications at Cherry, told TotallyGaming.com: “Game Lounge is a vital part of the Cherry Group and we trust the company will continue to grow its market in current and new market segments.

“Game Lounge acquired a Finnish loan affiliate website (Lainat.fi) in November and we see a great potential in their business model to enter even more segments.

“In the third quarter [of] 2017, Game Lounge continued to grow, and revenue amounted to MSEK (Million Swedish Kroner) 45, an increase of 180 percent compared with the third quarter 2016. EBITDA margin amounted to 75 percent.”

Adding: “We expect [the] Game Lounge expansion to continue, and with a 95 percent holding of the company we expect it to also deliver a strong cash flow.”  

The acquisition of a further 44% of Game Lounge shares is set to be financed in equal parts through company cash, and the issuing of new shares in Cherry AB.

It was also detailed that the purchase price ‘is based on a multiple of 4.5 times the 2017 profit of the affiliate operation and 6 times the 2017 profit of the white label operation.’

The cash portion of the transaction is due to be disbursed by April 30 of this year, while the new issue has to be settled by the Cherry AB Annual General Meeting in May 2018, after this it is expected to be closed.

Shares remaining following the acquisition are to be held by the founders of Game Lounge, with the individuals also set to stay on as the company’s head of sales and CEO respectively.

Totally Gaming says: With a majority stake in Game Lounge secured some time ago, Cherry has had plenty of time to monitor progress and analyse its option to acquire further shares. It remains to be seen if the firm can capatalise further still on what it states is a “strong position in a growing market’ that Game Lounge currently occupies.

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