Canadian online gambling software provider Amaya Gaming group will announce its acquisition of bwin.party’s poker network Ongame for an unknown sum by the end of the week, eGaming Review can reveal
Canadian online gambling software provider Amaya Gaming group will announce its acquisition of bwin.party’s poker network Ongame for an unknown sum by the end of the week, eGaming Review can reveal.
The service provider, that has been courting the loss-making poker network for the last two months, recently entered into an exclusive preferred bidder position with Ongame’s owner bwin.party that has been looking for a buyer since the spring of last year when it publicly deemed it a “surplus asset” following the merger of Bwin and PartyGaming.
A source within the company said the deal had been done for “two weeks” but that negotiations had been on-going for the last two months.
Amaya’s chief executive David Bassov is known to be on leave until the middle of this week and could announce the deal as soon as the next 24 hours, according to the source.
The cost of the deal is not known although bwin.party co-CEO Jim Ryan is understood to have been holding out for a similar fee to that of previous bidder Shuffle Master that had agreed to acquire the network for €19.5m in March but “mutually agreed” to cancel the deal three months later. It cited Ongame’s recent performance, along with difficult economic conditions in Europe, for making the deal no longer financially viable. “It has become evident to us that Ongame’s operations post-acquisition will not achieve the near-term results we initially expected and will require a larger on-going investment than anticipated,” Shuffle Master’s CEO Gavin Isaacs (pictured) said at the time.
According to numerous sources the network is thought to be losing between €500,000 to €1m Euros per month and employs around 200 staff in Sweden. Swedish staff are notoriously difficult to ease out of a business if shutdown or acquired.
The price however, could have come down with US supplier IGT being forced to shut down IGT Poker last week, formerly Entraction, just 16 months after it acquired the company for £70m. eGR also understands that IGT will have to pay up to $40m to pay off Entraction’s employees and to fully close the operation – an area that has put off a number of bidders for Ongame including social gaming business Zynga that flirted with acquiring a ready-made poker platform in preparation for a regulated US market.
Officials at both Amaya and bwin.party refused to comment when contacted by eGR.
The supplier has been on the acquisition trail for the last 12 months buying both well-established online games manufacturers Chartwell in May 2011 and more recently CryptoLogic in February this year. Cryptologic has a large portfolio of casino games licensing games to a number of tier one and two operators, however it experienced a number of financial problems in the last few years and was eventually snapped up by the Canadian newcomer for $36m.
The acquisitions of CryptoLogic and Chartwell games helped the Montreal-listed software provider record a year-on-year revenue increase of 285%, the company revealed in its results for the three months ended 30 June at the end of last month.
Gross profits amounted to $14.1m, equivalent to 97% of group revenues, however it also recorded a net loss of $2.7m due in part to general and administrative expenses of $12.4m, related to operations in territories such as Kenya, where the company launched the first regulated egaming offering in October 2011.
Since the end of the second quarter, Amaya has also made its first move into the Belgian market through a deal with Circus Groupe subsidiary Circus Services SPRL, focusing on its casino777.be site.
It has recently also launched its first mobile casino games including a selection of its own as well as blackjack and a variety of lottery across all mobile platforms, smart phones and tablets. At the same time it launched a live dealer solution in conjunction with HoGaming.
At the beginning of August Amaya announced a three year licensing agreement with Betfair supplying the operator with a selection of its proprietary and branded games via an Openbet integration onto the Betfair Arcade to complement its existing content.