JPJ Group plc - Proposed acquisition of Gamesys
JPJ has announced a £490m proposed acquisition of Gamesys (its current platform provider), which equates to c 7.3x adjusted EV/EBITDA. The resulting company will be over 50% larger and key benefits include full control of the technology and meaningful scale with high-profile brands. The £490m consideration will be split between £250m cash (including £175m add-on facilities) and £240m in 33.7m new JPJ shares. Net debt/EBITDA is expected to be c 3.1x on the pro forma basis, although we envisage rapid deleveraging going forward. Our initial analysis suggests that the deal will be c 10% EPS accretive in FY20, implying a c 6.5x FY20 P/E, and we will adjust our forecasts after the conference call.JPJ Group is an online gaming holding company. Through its subsidiaries, Co. is engaged in providing bingo, casino and other games to its customers. Co. operates in three segments: Vera&John, which consists of the online casino operations of various brands, including Vera&John and InterCasino; Jackpotjoy, which consists of the real money and social gaming operations of the Jackpotjoy, Starspins, and Botemania brands; and The Mandalay, which consists of the operations of various online bingo websites operated off the Dragonfish platform and the operations of affiliate portal websites.
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