Sidney, Australia-based Aristocrat Leisure Limited (ASX: ALL) agreed to acquire 100% of Israeli social gaming company Plarium Global Ltd, for US$500 million in cash upfront and an earn-out payment implying a multiple of 10x LTM EBITDA at year end.

Plarium is a privately owned free-to-play mobile, social and web-based game developer with over 1,200 employees across five genre-specific studios, and offices in Israel, Russia, Ukraine, UK, and the US. The company has nine key titles that are currently monetizing and a strong game pipeline across multiple genres. Plarium’s most popular game to date, Vikings: War of Clans, has repeatedly ranked in the top 10 grossing Strategy games since launch in key target markets.

The company’s social games are available on Facebook, Vkontakte, Odnoklassniki and Mail.Ru, and its mobile games are available on iOS and Android devices. Plarium has previously employed BAFTA award winner, Jesper Kyd, known for his work on video games such as Assassin’s Creed and Borderlands, to compose the music for their own games.

Plarium was formed in 2009 by numerous founders, including brothers Avraham and Gabi Shalel, Haim and Illya Turpiashvili, Ivan Vorobeychyk, Michael Morgovsky and Yaron Hakimi. The cpmpany started out by developing games for the Eastern European casual gaming market, such as Farmandia on the Russian social network VKontakte. In 2011, Plarium began developing Massively Multiplayer Online Strategy Games, and released Total Domination reaching 20 million users, and raising a seed venture round led by Israeli angel investor Gigi Levy-Weiss, who became its chairman.

Plarium’s CEO and co-founder Avraham Shalel will continue to lead the firm post acquisition. Shalel and 12 other key members of Plarium’s management team have agreed to retention and deferred consideration arrangements with Aristocrat, including deferring a portion of their upfront consideration until the end of calendar year 2020. The acquisition is expected to be EPSA accretive in year one.

Aristocrat is a leading global provider of gaming solutions. The group is licensed by over 200 regulators and its products and services are available in over 90 countries around the world. The company offers a diverse range of products and services including electronic gaming machines and casino management systems. It also operates within the online social gaming and real money wager markets.

The deal is expected to close by the end of December 2017, subject to regulatory approvals and other customary closing conditions.

“The acquisition of Plarium allows Aristocrat to expand our addressable market into logical adjacent segments in the fast growing mobile gaming market,” said Aristocrat CEO and Managing Director Trevor Croker. “This immediately expands our addressable market from US$3.2bn in the Social Casino segment, to US$25.4bn when including the Strategy, RPG and Casual segments. It also provides us with a stronger platform to target the US$43.6bn overall mobile and web games market as growth segments.”

“I am very proud of the success we have achieved since establishing the business in 2009,” said Plarium’s Shalel. ““Aristocrat is an ideal partner for us given our common aspiration to be a global leader in social gaming, which will be accelerated through leveraging Aristocrat’s financial, strategic and operational resources.”

Aristocrat will fund the acquisition via existing cash and an incremental US$425 million 7 year Term Loan B debt facility.

Citi is acting as the sole financial adviser to Aristocrat, and Allens, Herzog Fox & Neeman and Covington & Burling LLP are its legal advisors. Deutsche Bank is acting as financial adviser to Plarium and Goldfarb Seligman are its legal advisors.



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