GVC sells off Turkish assets

Online gambling group GVC Holdings plc has revealed in a stock exchange advisory that has sold Headlong Limited, a wholly owned subsidiary, and other companies that comprise its Turkish facing operations to Ropso Malta Limited, a company backed by investors currently providing the primary IT services to the business, for a performance-related earn-out consideration of up to Euro 150 million in cash.

The consideration is receivable on a monthly basis over a five year period.

Completion is conditional on gaming regulatory and lender approval and is expected take place by the end of December 2017.  Following completion, transitional services arrangements have been agreed for an initial limited period not to exceed 6 months.

In the year ended 31 December 2016, Headlong and associated businesses generated approximately Euro 35 million of Clean EBITDA; management expect a similar contribution from the respective operations for the financial year ending 31 December 2017.

Headlong and associated businesses had gross assets of Euro 21 million as at 31 December 2016.

The GVC announcement advises:

“The decision to sell Headlong and associated businesses has been taken against a backdrop where, in an increasingly maturing and regulating online gaming world, the Board has concluded it is now appropriate for GVC to further increase its focus on regulated markets.

“Following the disposal the regulated and/or locally taxed proportion of the Group’s NGR will increase to approximately 75 percent.

“The disposal proceeds will be used for general corporate purposes and will not impact the Group’s stated progressive dividend policy. In addition, the Board believes that the disposal will increase the attractiveness of the Group to investors and potential consolidation partners.”

In a trading update GVC advised that it has seen a strong start to the latest quarter, with daily NGR 26 percent (29 percent in constant currency) ahead of the same period in 2016, boosted by an exceptionally high sports gross win margin of 13 percent, and a positive response to new marketing campaigns.

CEO Kenneth Alexander said:

“As the Group evolves, our focus is increasingly on regulated markets and markets where we believe there is a realistic path to regulation. Today’s disposal is consistent with this strategy and enhances GVC’s position as a leading operator in a rapidly developing industry.”

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