CES Software plc acquires Don Best Sports
By staff
LONDON, England – CES Software plc (the “Company” or “CES”), a leading provider of skill gaming and exchange-betting technology, announced today that it has entered into a conditional agreement to acquire the entire issued share capital of Corcom, Inc. (a Nevada corporation) (“Corcom”) and certain assets associated with Corcom's business, Don Best Sports (Corcom and the associated assets are together referred to herein as “Don Best”).

Founded in 1989, Don Best (www.donbest.com) is a leading Internet sports information provider, based in Las Vegas, Nevada, U.S.A. Its core business is publishing exclusive, real-time wagering odds on the Internet for its Internet subscriber base. Don Best does not accept or make wagers. It also publishes a wide range of market-sensitive information which enables its customers to make a more educated wager, and enjoy the ability to monitor the continuous changes in wagering odds. Don Best also provides subscription services for live odds, major line move alerts, urgent messages, injury reports, statistical reports, line seeker, bet tracker, and offers full user customisation.

For the nine months ended September 30, 2004, Don Best made a loss of US$ 0.25 million on turnover of US$ 7.85 million. The loss includes certain discretionary or other expenses, incurred during the period, that are not likely to recur following the completion of the acquisition. These expenses are estimated by the Company based on information provided by Don Best's management to amount to approximately US$ 5.48 million. As at September 30, 2004, Don Best had net liabilities of US$ 2.98 million. Adjusted for those non-recurring expenses, Don Best’s annualised, pro-forma profit before tax for the nine months ended September 30, 2004 would have been US$ 6.968 million.

The consideration for the acquisition of Don Best is the payment to the sellers of US$ 40 million in cash, the issuance of one million CES ordinary shares (“Ordinary Shares”) on completion, and the issuance of a maximum of one million further Ordinary Shares pursuant to an earn-out. Under the terms of the earn-out, the sellers will be issued one additional Ordinary Share for each US$ 1 that Don Best’s EBITDA, for the twelve-month period commencing on the first day of the first full month immediately following the closing of the acquisition, exceeds US$ 6 million. In August 2004, the sellers entered into an agreement (the “Purchase Agreement”) to sell Don Best to Celeus Capital Corporation (“Celeus”), part of JJR Capital Partners (“JJR”), a Toronto-based private equity firm. JJR later approached CES with the opportunity to acquire Don Best. JJR has conditionally agreed to assign its rights in the Purchase Agreement to CES in consideration of the issue of 2,240,000 Ordinary Shares. In addition, CES will reimburse Celeus for US$ 1 million of expenses incurred by it in connection with the entry into the Purchase Agreement.

The acquisition remains subject to regulatory approval, and is scheduled to be completed no later than January 31, 2005. Application will be made for the admission of the Ordinary Shares to be issued on the closing of the assignment and the acquisition of Don Best to trading on the Alternative Investment Market of the London Stock Exchange and for the listing of such shares on the Toronto Stock Exchange.

The holders of the Ordinary Shares to be issued on closing of the assignment and the acquisition of Don Best have agreed not to dispose of any of such shares without the consent of the Company and its nominated adviser for a period of twelve months following closing save for in limited prescribed circumstances such as the acceptance of a takeover offer for the Company.

Dana Corbo, Don Best’s President and CEO, and the other members of the Don Best management team have agreed to continue to perform in their current roles and will remain with the business following the completion of the acquisition.

The Company believes that the acquisition of Don Best will create additional value for CES shareholders. Don Best’s business complements CES’ current exchange-betting and skill-gaming divisions, and fits into CES' overall strategy of using the Internet to create a more fun, varied and efficient gaming experience. The acquisition is in line with CES’ previously stated goal of using strategic acquisitions to augment its distribution, product offerings and presence in new geographic markets. The acquisition would bring a popular, innovative product line into the CES suite of gaming-related businesses, and represents another important step towards CES’ goal of becoming a leading participant in the regulated, online gaming marketplace.

The Company is proposing to raise up to £8 million by way of a placing of new Ordinary Shares which is expected to close shortly after the completion of the Don Best acquisition. The placing will be subject to shareholder approval being obtained to issue the relevant new Ordinary Shares and a circular convening an extraordinary general meeting for early February 2005 at which the necessary resolutions will be proposed will be sent to shareholders shortly. The proceeds of the placing will be used to further develop and grow the Company's skill gaming business and for general corporate purposes. The Company believes that an investment in skill gaming at this time, given the growth of the business and the market opportunity that exists in skill gaming, will provide substantial returns to shareholders. The Company expects to sign significant new licensees in 2005 in its skill gaming business.

Lorne Abony, Chief Executive Officer of CES, remarked: “We believe that the Don Best acquisition represents an enormous leap forward for the Company in terms of its growth in new markets and new distribution channels. Our goal is to leverage the Internet to offer more value and choice for players—and the acquisition of Don Best is directly in line with our strategy. Furthermore, the Don Best business is in keeping with our overall corporate goals of meaningful revenue and earnings growth. With strong, complementary business units, we look forward to an exciting 2005.”

For more information, contact:

CES Software plc

Lorne Abony, CEO

Tel: 001 416 840 0449

James Lanthier, CFO

Tel: 001 416 840 0448

Tracey Irwin, Investor Relations

Tel: 001 416 840 0806 x101

Panmure Gordon (a division of Lazard)

Dominic Morley

Tel: 020 7187 2000

Catullus Consulting

Alex Mackey

Tel: 020 7736 2938

About CES Software plc

CES Software plc (“CES”) is a leading provider of person-to-person skill gaming and exchange-betting technology. CES’s strategy is to provide its cutting-edge, person-to-person gaming systems to top, licensed distribution partners in regulated markets around the world. CES is a public company, incorporated in England and Wales, and is listed on the Toronto Stock Exchange under the Symbol “FUN” and quoted on the Alternative Investment Market (AIM) of the London Stock Exchange under the symbol “CES”.

Forward-Looking Information

Except for historical information, this press release contains forward-looking statements which reflect CES’ current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time to time in CES’ ongoing operations. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not

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