IGT Sells Social Casino Business To South Korean Gaming Company
International Game Technology (IGT), a firm specializing in slot and video gaming machine design has agreed to sell its social casino-focused subsidiary Double Down Interactive LLC, to a South Korean company called DoubleU Games Co.
Double Down Interactive develops social casino games and is most well-known for the game Double Down Casino which has often been described as one of North America’s largest social casino platforms. NYSE -listed IGT had purchased Double Down for $500 million in early 2012.
IGT has sold Double Down Interactive for $825 million deal to a subsidiary of DoubleU Games Co, which is one of South Korea’s leading global social casino operators.
In a statement, Marco Sala, CEO of IGT said,
Since acquiring Double Down in 2012, IGT has grown it into one of the largest and most successful brands in the North American social casino market. After several years of strong, organic growth and increasingly attractive valuation levels, the time is right for us to maximize the value of this asset for our shareholders
Sala also highlighted that the partnership between them would be continued via a multi-year, strategic agreement. Ga-Ram Kim, CEO of DoubleU Games stated that the transaction would combine its operational excellence with IGT’s
The deal price is 10.5 times the full-year 2016 Adjusted EBITDA of Double Down. The sale proceeds are expected to be used towards debt reduction and other corporate purposes.The deal has been approved by the IGT Board of Directors and also by the key governance committee of DoubleU Games. IGT has stated that it would be updating its financial outlook with the expected impact of the deal by the end of May along with the release of this year’s first-quarter results.
After the completion of the sale, the two companies will enter into an agreement that will allow DoubleU Games to showcase IGT’s casino games library on its merged social casino platform with IGT receiving royalties on it.
According to latest results released in March, the full-year 2016 net income for IGT was $211.3 million while the adjusted EBITDA was nearly US$1.76 billion. The Double Down division recorded revenue of $280.0 million for the entire 2016, a decline from the 11.7 percent seen in 2015. It also saw a fall of 14.3 percent in terms of the average daily active users, declining to 1.6 million.
Posted on: 19th April 2017 by: Gary Beachley