Betsson acquires 3 brands from Cherry AB
Betsson AB has ventured into a conclusive deal to acquire a trio of brands from fellow internet gambling provider Cherry AB one week after confirming a 27 percent year-on-year rise in total yearly income to SEK2.2 billion ($347.76 million).
Betsson has decided to pay an amount worth SEK286 million ($45.21 million) to take charge of the SverigeAutomaten.com, NorgesAutomaten.com and DanmarksAutomaten.com domains and it promises to fulfill the most of this sum by handing Cherry 1,063,895 new Class-B shares.
Betsson mentioned that the other SEK60 million ($9.48 million) of the asking price is to be given in cash a year after the completion of the agreement, which is to properly see it take liability for the external marketing of the domains from Cherry Malta Limited as it already manages operational duties.
Chief Executive Officer for Betsson, Magnus Silfverberg, stated “The deal is in line with our strategy to focus on business-to-consumer in our core markets in the Nordics,”
“Our judgment is that the acquired brands will develop stronger internally because we can use the marketing power and scale advantages of the entire Betsson group.”
As for the company, Cherry said that the deal is to additionally see it pay SEK1 million ($158,080) to Betsson’s Maltese subsidiary for the rights to the CherryCasino.com domain, which earned SEK1.5 million ($236,955) in profits last year.
Chief Executive Officer for Cherry, Emil Sunvisson, said “We are very pleased that we are able to realise the great value within the ‘Automaten’ sites and come to the conclusion that the Automaten sites have been a very successful as well as a profitable business for Cherry and the shareholders of Cherry,”,
“The divestment represents a fresh start for Cherry’s online businesses, where upcoming growth will be created from our own platform and where we are able to control the customers, the products and the offering. Further on, an own platform represents an opportunity to reach higher margins with increased volumes”
“From now, we are focusing ahead on new products with an offensive marketing strategy, which in the short-term will burden the margins. Therefore, I believe that Cherry will report negative margins within the online gaming business area during the second and third quarters of 2013 but, on the other hand, I expect to see significant revenue growth. I believe that the divestment is the foundation of many years of profitable growth.”
