Deals
Gaming Realms Plc Acquires Quick Think Media Ltd
Gaming Realms, the creator and developer of interactive next generation online gaming products, announces the acquisition of specialist marketing agency Quick Think Media Ltd ("QTM") for a total consideration of approximately £2.2 million (the "Acquisition"). In addition, the Group also announces that is has conditionally raised approximately £2.4 million through the proposed placing of 11,476,190 new ordinary shares at 21 pence per share ("Placing Shares") with new and existing shareholders (the "Placing").
The Acquisition
QTM is a specialist online gaming marketing agency, with particular expertise in online bingo and casino products. The acquisition of QTM supports the Group's strategy to establish itself within the bingo and casino segment of the social gaming market, as well as launch real money bingo and casino games in the UK regulated market. Over the longer term the Company intends to either acquire or develop and launch freemium and real money social and gambling games across multiple platforms.
QTM will enhance Gaming Realms's activities by cost-effectively capturing new users across emerging digital channels including Facebook, as well as cross promoting players to its own databases and vice versa. QTM trades profitably and will bring a significant revenue stream to the business. In the year ended September 2013 it made profit before taxation of £228,000 (2012: £193,000) and has gross assets of £119,000.
The aggregate consideration in respect of the Acquisition is £2,220,850 comprising £1,470,850 in cash and a deferred payment of 3,571,428 new ordinary shares ("Consideration Shares") being the equivalent of approximately £750,000 at a price of 21 pence per share to be allotted and admitted to trading 12 months from completion. QTM has given certain customary warranties to Gaming Realms which last for 18 months from completion and are limited to a maximum aggregate liability of the aggregate consideration.
QTM was founded by Tom Gooding, Simon Smiley and David Hampstead (the "Vendors"). The Vendors were founders of Bejig, the social casino business sold to Gaming Realms earlier in the year, as well as previously working in online casino companies such as Jackpot Joy, Rank and Ladbrokes. The Vendors have undertaken to retain their shares for a minimum of 18 months.
The Vendors are directors of Bejig Limited, a wholly owned subsidiary of the Company and are therefore related parties for the purposes of the AIM Rules. Under the AIM Rules, on an aggregated basis, the Acquisition constitutes a related party transaction. Having consulted with Cenkos Securities, the Company's nominated adviser, the Directors of the Company consider that the terms of the Acquisition are fair and reasonable insofar as its shareholders are concerned.
The Placing
The Company has today placed 11,476,190 new Ordinary Shares at a price of 21 pence per share, to raise proceeds of approximately £2.4 million (net of expenses). These funds will be used to satisfy the cash element of the QTM acquisition as outlined above, with the balance being used for additional working capital. The Placing will represent 7.3% of the Company's enlarged share capital.
The Placing is not underwritten, but the Placing Shares have been conditionally placed by Cenkos Securities, as agent for the Company, with institutional and other investors in accordance with the terms of the Placing Agreement.
The Placing Agreement is conditional upon, among other things, admission of the Placing Shares becoming effective before 8.00 am on 16 December 2013, (or such later time and/or date as the Company and Cenkos Securities may agree, but in any event by no later than 8.00 am on 30 December 2013) the performance by the Company of its obligations under the Placing Agreement and the satisfaction or, where appropriate, the waiver of certain other conditions set out in the Placing Agreement.
Pursuant to the Placing, application has been made for the Placing Shares, which will rank pari passu in all respects with the Company's existing ordinary shares, to be admitted to trading on AIM ("Admission"). Admission is expected to be effective from 8.00 am on 16 December 2013.
Michael Buckley, Executive Chairman of Gaming Realms, commented: "We are pleased to welcome the QTM team into the Group. Our combined marketing operations will be able to secure new customers over a shorter timeframe and at lower cost across the business, particularly in the new digital channels which are now available.
"In addition, QTM brings a growing profit stream and user base into the Group, both of which can be used to further enhance our brand development activities. The online gaming environment is expanding, particularly in the mobile and tablet space where we are focused, and we are optimistic for the future of the Company."
Tom Gooding, co-founder of QTM, said: "I am very excited by the opportunities this deal brings. We have developed an innovative marketing capability which we believe will complement Gaming Realms's existing marketing activities. We look forward to deepening our relationship with Gaming Realms and contributing to the development of a leading online gaming business."
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