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Sportingbet Plc, the leading global internet sports betting group, is pleased to announce today that it has acquired (subject only to the admission of the consideration shares to listing) the entire share capital of Sporting Odds Limited for a consideration of £4.5m. Sporting Odds is the fixed odds business of spread betting company Sporting Index.
The consideration will be satisfied by the issue of £2.0m of Sportingbet 0.1p ordinary shares to the vendor, Sporting Index Holdings plc, together with a loan note for £2.5m. The ordinary shares, priced at 101pence being the average market price for the 30 days prior to acquisition are subject to a lock-up agreement until October 2003. The loan note, of which £2m is subject to a bank guarantee, pays a coupon of LIBOR plus 1 per cent and is repayable in full on 31 October 2003. In addition to the above, Sportingbet has acquired the tax losses of Sporting Odds of £6million for a maximum deferred consideration of up to £540,000, paid on an as used basis and Sporting Index will provide management services for up to two months following completion for £250,000 (exclusive).
Sporting Odds is an exclusively Internet based sports betting company, focused almost wholly on the U.K. betting market. Sporting Odds has been trading since June 2000 and has grown rapidly to a turnover in excess of £38m for the year ending 31 May 2002. (Net liabilities at the last audited balance sheet of 31 May 2001 were £8.5m with a loss for the year of £7.1m) Sporting Odds presently has over 65,000 registered customers of whom approximately 21% were active in the month of May 2002. Although Sporting Odds has historically been loss making, it has recently become profitable at an EBITDA level. Moreover, significant cost savings will be made by Sportingbet by integrating the two businesses over the next three months. Post integration, Sportingbet will have in excess of 120,000 customers from Europe, effectively double that of today, but the business will be operating at little incremental cost to that of Sportingbet today.
Under the terms of the acquisition, Sporting Index will continue to provide a click through on its website to the fixed odds Sporting Odds business and Sportingbet will provide a click through on its sites to the sports spread betting business of Sporting Index. These activities are subject to a mutual revenue share agreement.
Commenting on the acquisition, Nigel Payne, Chief Executive of Sportingbet Plc said, “We are delighted to be acquiring such a successful brand as Sporting Odds. Over the past year Sportingbet has grown its European business significantly and this acquisition, which will be run on shore in the United Kingdom, materially increases our critical mass into the region and our aim of making Europe a substantial profit making part of the group along with our existing profitable businesses into the Americas, Asia and Australia.”
Richard Glynn, Chief Executive of Sporting Index said: “Judi Slot Index is the acknowledged market leader in sports spread betting in the UK and this transaction marks the beginning of an exciting phase of international growth. Sportingbet will provide a unique world-wide distribution platform for our ever-increasing range of spread betting products to an ever-expanding international audience. By taking part consideration in stock, the Sporting Index Group can also retain an interest in the rapidly expanding fixed odds sports betting market.”