M&A: Gaming Innovation Group (GIG) acquires KaFe Rocks

Lea Hogg 7 months ago
M&A: Gaming Innovation Group (GIG) acquires KaFe Rocks

Gaming Innovation Group Inc. (GiG) has taken a significant step by signing an agreement to acquire KaFe Rocks Ltd., a leading affiliate company. This strategic acquisition will solidify GiG Media’s position as a dominant lead generator in the highly profitable online casino market and accelerate its presence in the valuable North American market.

Powerful addition

The acquisition is built on strong synergies, further propelling GiG Media’s remarkable track record of 12 consecutive record-breaking revenue quarters. GiG Media’s growth trajectory receives a substantial boost with the addition of KaFe Rocks.

KaFe Rocks is a renowned iGaming affiliate known for its top 10 rankings among Power Affiliates. It possesses a diversified global portfolio, spanning more than 15 markets and featuring user-centric flagship brands, including Time2play.com and USCasinos.com. These brands are particularly focused on the US market and Time2Play has shown impressive revenue growth over the past year, with further acceleration expected.

Proprietary technology

Following the successful integration of AskGamblers, GiG Media plans to drive substantial growth for KaFe Rocks by leveraging its proprietary media and marketing technology, with a strong emphasis on data and business intelligence. The deal’s cost synergies will enhance profitability for the acquired business.

It is anticipated that KaFe Rocks will generate a minimum revenue of MEUR 23 in 2024, with an EBITDA margin exceeding 45 percent. This translates to a 2024 EV/EBITDA multiple of approximately 3.6x for the acquisition. Furthermore, the EBITDA margin is projected to increase over the coming years.

Beyond revenue and EBITDA growth potential, this acquisition will diversify GiG Media’s business, reducing concentration risk and improving customer, website, and market diversification. GiG Media’s revenues are expected to reach between MEUR 125-135 in 2024.

Management’s vision

Jonas Warrer, CEO of GiG, (in photo above), expressed his enthusiasm for the acquisition, stating, “Our goal is to maintain our position as the leading casino affiliate in the industry and expand our presence in the North American market. The acquisition of KaFe Rocks aligns with these objectives. After successfully integrating AskGamblers, we have been seeking the next promising addition to our family. In KaFe Rocks, we’ve found a thriving business led by an exceptionally skilled team. Their reputable affiliate assets will undoubtedly drive growth for the broader group. I look forward to working closely with the KaFe Rocks team.”

Aimee Speight, spokesperson for KaFe Rocks, added, “Joining forces with GiG Media is a significant milestone for KaFe Rocks. We evaluated multiple buyers and ultimately chose GiG Media based on the company’s impressive performance in recent years. By becoming part of GiG Media, we are optimistic about the future and the potential for KaFe Rocks to reach new heights.”

Transaction details

The purchase price for KaFe Rocks amounts to MEUR 35, which includes a MEUR 15 upfront cash payment and MEUR 20 in four semi-annual payments over 24 months, with an additional earn-out based on specific performance targets. In addition, GiG will issue MEUR 2.5 in shares, contingent on achieving operational cost savings targets.

Closing the deal

The transaction is structured as a Share Purchase Agreement (SPA), with GiG’s subsidiary, Innovation Labs Ltd. (part of GiG Media), acquiring KaFe Rocks Limited (Malta).

GiG intends to finance the initial consideration through a combination of existing cash, shareholder loans, and potential bond proceeds. The completion of the transaction is contingent on due diligence, financing, regulatory approvals, final board approval, and is anticipated to be finalized in December 2023.

About Gaming Innovation Group (GiG)

Gaming Innovation Group is a leading iGaming technology company that offers solutions, products, and services to iGaming operators. Established in 2012, GiG’s vision is to become the industry’s leading platform, sportsbook, and media provider, delivering world-class solutions to iGaming partners and their customers. Headquartered in Malta, Gaming Innovation Group is listed on the Oslo Stock Exchange under the ticker symbol GIG and on Nasdaq Stockholm under the ticker symbol GIGSEK.

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