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Sportech Sells Stake in Sportech-NYX Gaming for CAD$22.9 million

  • 28 May 2015
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Sportech PLC (“Sportech” or the “Group”) is pleased to announce that it has sold its 50 per cent stake in Sportech-NYX Gaming, LLC (“SNG”) to its joint venture partner NYX Social Gaming LLC, a wholly-owned subsidiary of NYX Gaming Group Limited (“NYX”), the Toronto listed (TSX-V:NYX) online gaming content and technology provider,for a total consideration of up to CAD$22.9 million (£12.0 million) (the “Disposal”), generating an estimated pre-tax profit on its investment of CAD$16.8 million (£8.8 million).

Terms of the Disposal

The Disposal comprises the Group’s 50% interest in SNG which includes one customer contract, online casino software as well as a number of employees.

Sportech shall receive a total consideration of up to CAD$22.9 million (£12.0 million) which comprises: CAD$10 million in cash (£5.2 million), 2.2 million NYX ordinary shares equating to an aggregate value of CAD$9.9m (£5.2 million) based on the NYX closing price on 27 May 2015 of CAD$4.51 per share and up to a maximum of CAD$3 million (£1.6 million) in deferred consideration.

The cash component of the consideration shall be received in two tranches: CAD$5 million payable on completion and CAD$5 million payable by no later than 19 August 2015. The deferred consideration shall be payable to Sportech in tranches of CAD$1 million for each non-New Jersey customer acquired by SNG for a total of 3 such customers signed over the next 5 years.

Following the Disposal, Sportech will own 2.2 million NYX ordinary shares, representing approximately 6.1 per cent of the enlarged share capital of NYX. Sportech has agreed to a 12 month lock-up in relation to the consideration shares. The Disposal is subject to regulatory approvals.

Strategic rationale for the Disposal

The Group’s strategy encompasses opportunities across the North American sports gaming and technology market. Proceeds from the Disposal will enable the Group to accelerate its near term development plans whilst retaining a material interest in casino and poker online gaming through an equity stake in NYX.

Financial information

For the year ended 31 December 2014, SNG had not commenced trading and had no revenues or associated costs. Sportech’s share of losses to the date of disposal is estimated to be £0.2m and its share of net assets at the date of disposal is estimated at £1.9m. Pre-tax profit on disposal net of costs is expected to be £8.8m.

Commenting on the transaction, Ian Penrose, Chief Executive of Sportech, said:

“We are pleased to have reached this agreement with NYX, generating a significant return for the Group in a short space of time. The structure of the deal enables us to reinvest in our US growth activities in the sports gaming market, whilst retaining a material stake in the future of online casino gaming in North America. NYX is endeavouring to build a market leading position and we look forward to sharing in this opportunity with them.”

Matt Davey, Chief Executive of NYX, added:

“We’ve enjoyed a strong partnership with Sportech and look forward to opportunities to work together in the future.”

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