Party Gaming Acquires Cashcade Ltd. - 07-25-09

July 25 - UK listed online gambling giant, Party Gaming, announced on Thursday that it had acquired Cashcade Ltd. for GBP95.9 million.

This is Party Gaming's first deal since their settlement with US authorities earlier this year.

Party Gaming, based in Gibraltar will make an up-front payment of GBP71.9 million for Cashcade, with another GBP24 million dependent on Cashcade's financial performance in the future.

The deal is reported to be financed through cash reserves. Party's share price was boosted by the news and increased by 5.8% to 248 p on Thursday. Overall their stock is up by 27% since January, and 18% over the past 12 months.

Cashcade is mainly owned by private investors with an 18% stake being held by  UK based media company Independent News & Media PLC (IPD.DB).

Cashcade operates numerous bingo sites including Foxy Bingo, Think Bingo and Bingo Scotland. They also operated Getminted.com, a bingo and casino site.

Cashcade's earnings before interest, tax, depreciation and amortization was GBP12.2 million in 2008 on net revenue of GBP44.9.

Jim Ryan, PartyGaming's Chief Executive said the acquisition offers "an excellent platform to build a meaningful share of the $1.5 billion global online bingo market."

Cashcade is estimated to own about 23% of the UK online bingo market, which is believed to be worth $410 million.

The value of the U.K. and global online bingo markets are estimates provided by H2 Gambling Capital, which supplies data and statistics to the gambling industry, the spokesman noted.

In April, PartyGaming agreed to pay $105 million to U.S. authorities, and in turn the U.S. attorney's office for the Southern District of New York agreed not to prosecute the Gibraltar-based company or its subsidiaries for providing Internet gambling to customers in the U.S. before the federal government's ban of the industry in October 2006.