Cherry as an online gaming company is cooperating with the affiliate company Game Lounge Limited. They just recently have publicly announced that they will be acquiring 100% of the shares in Game Lounge.
They already possess 56% of the stakes, so they will purchase the additional 44% of the shares for a price 4.5 times the profit of the affiliate operation in 2017 and 6 times the profit of the white label operation in 2017.
The entire purchase will be financed partly through cash and partly through issuing shares in Cherry AB. However, the cash part or €1.4 million ($1.6 million) is expected to be paid by April 2018. The Cherry AB Annual General Meeting in May 2018 will be the final date when the whole purchase is expected to be settled.
This deal follows after Cherry AB purchased 51% of the shares in Game Lounge Limited in January 2015.
After the deal will be closed, Cherry will be the holder of a total of 95% of the shares in Game Lounge. The Game Lounge founders who will stay on CEO and Head of Sales positions after the sale is concluded hold the rest of the shares. After three years, Cherry will have the option to buy all 100% of the shares.
Anders Holmgren, CEO of Cherry, announced the purchase decision by stating: “Game Lounge holds a strong position in a growing market. In the third quarter 2017, Game Lounge continued to grow, and revenue amounted to MSEK 45, an increase of 180 percent compared with the third quarter 2016. EBITDA margin amounted to 75%.
“Game Lounge’s business model is remarkably scalable, the company has unique capabilities in search-engine optimisation (SEO) and is the recognized standard in affiliation within the gaming industry, and we see great potential to expand the scope of the business to also include other segments, such as the loan affiliate website Lainat.fi, acquired by Game Lounge in November.”
“The acquisition of Game Lounge is a significant development for Cherry as we enter into our first white label agreement and give Cherry a stronger position in the affiliate sector,” Cherry chief executive officer Fredrik Burvall said.
“It has the potential to increase volumes at a much lower cost, both for Cherry’s current brands and the white label brands.
“Acquiring a profitable affiliate operation with a team highly skilled in search-engine optimisation (SEO) and affiliation will also enable our brands to get strong positions on other affiliate sites and search engines.
“This is an extremely exciting acquisition for Cherry and will push the online gaming business area forward.”
Jonas Cederholm, the Chief Executive Officer of Game Lounge, added: “We are delighted to have Cherry as investors in Game Lounge and we know from working with Cherry that we will be able to launch SveaCasino.com as a top casino on desktop, mobile, and tablet on one of the best platforms in the industry.
“Our strength within SEO and affiliation and Cherry’s long experience with running online casinos is a good match which will enable us to grow further both within affiliation and through white labels.”