|Sportingbet plc ('Sportingbet')|
Strategic expansion in Australia
Sportingbet announces that it has purchased the business and customer database of Michael Sullivan, one of Australia’s leading oncourse telephone bookmakers, for a consideration of A$4.9 million (£1.8 million), of which half will be paid on completion and half will be paid on the first anniversary of completion.
The acquisition provides Sportingbet with increased presence in the Australian market and will aid the launch of Sportingbet’s onshore operations through the benefit of the services of one of Australia’s most well-known bookmakers. In addition, Michael Sullivan has agreed to join the board of Sportingbet Australia Pty Limited ('SB Australia') as Operations Director under standard Sportingbet terms.
The acquired database will be integrated into SB Australia’s onshore operations with effect from the end of February 2002. SB Australia was granted a telephone and internet bookmakers’ licence in Australia’s Northern Territories in January 2002. Sportingbet’s first move into the Australian market was in March 2001 with the acquisition of Number One Betting Shop.
Information on Michael Sullivan’s business
Michael Sullivan has been a bookmaker in Australia since 1990. In the 2001 Australian horse racing season, Michael Sullivan’s business was the largest oncourse bookmaker in Sydney in terms of revenue. The business, which is telephone based, has grown rapidly over the last five years during which period it has doubled its turnover every year. Michael Sullivan has a high profile in the Australian racing and bookmaking industry and is featured on the National Television Network Channel 10 as its racing-bookmaking expert.
For the year ended 30 September 2001, Michael Sullivan’s business generated gross profits of A$1.2 million (£450,000) from revenues of A$20.3 million (£7.5 million). Michael Sullivan’s business has achieved higher than industry average margins over the last five years due to his 12 years’ experience in risk management in the industry. The database of customers comprises approximately 600 clients whose profile in terms of spend and betting frequency is similar to Sportingbet’s existing business in the region.
Benefits of the acquisition
The acquisition of Michael Sullivan’s business has both strategic and immediate business benefits for Sportingbet’s operations in Australia, including:
· a high profile industry figure lending immediate weight to Sportingbet’s onshore marketing effort;
· increased critical mass into the market;
· a complementary database to Sportingbet’s existing Australian database; and
· improved risk management expertise.
Terms of the acquisition
Of the initial consideration of A$2.45 million (£900,000), two thirds will be paid in cash and one third will be satisfied by the issue of 229,143 Sportingbet shares. The deferred consideration of A$2.45 million (£900,000) will be satisfied as to one third in cash and two thirds in Sportingbet shares. Additional deferred consideration would be payable by Sportingbet to Michael Sullivan to the extent that 4.24 per cent. of the gross profits of SB Australia exceed A$4.9 million for the 12 month period following completion, subject to a maximum payment of A$8 million (£2.9 million).
The price at which Sportingbet shares have been and will be issued pursuant to the acquisition is an average of the closing Sportingbet share price calculated over the ninety day period prior to each payment. In addition, all Sportingbet shares issued to Michael Sullivan as part of the initial consideration and deferred consideration payments will be subject to a twelve month lock-up provision from completion and from the anniversary of completion respectively.
Commenting on the acquisition, Michael Sullivan said:
“I have known of Sportingbet for some time. They have a clear vision for how to address the global marketplace and the expansion opportunities that the Internet provides. Their focus on developing regional time zone centres matches my own exactly. I am delighted to be able to merge my business with Sportingbet and plan to play a major part in delivering this fabulous opportunity. I believe that I can add significant value to Sportingbet’s onshore business in Australia.”
Commenting on the acquisition, Nigel Payne, Chief Executive of Sportingbet, said:
“The acquisition of Michael’s business is an important acquisition for Sportingbet and completes the platform from which we can deliver our Australian onshore product. My Board colleagues and I look forward to working with Michael in exploiting the substantial opportunity that has brought us together.”
Sportingbet plc +44 (0) 207 251 7260 (office)
Nigel Payne +44 (0) 788 423 2735 (mobile)
Leanne Tritton/Robert Pine +44 (0) 207 247 8334
+44 (0) 7747 104 435