INSPIRED ANNOUNCES ACQUISITION OF SPORTECH LOTTERIES
NEW YORK, Jan. 4, 2022 /PRNewswire/ --
- Acquisition to expand Inspired's content reach to new customers and geographies and build out a platform of turnkey lottery/iGaming systems solutions.
- Concurrently, Inspired and LEIDSA have agreed to a 10-year extension to the lottery systems contract
- Upfront purchase price of US$12.5 million represents a multiple of 4.0x Sportech Lotteries' Adjusted EBITDA1 for the last twelve months (LTM) ended June 30, 2021 and 3.5x Sportech Lotteries' (pre-COVID) Adjusted EBITDA1 for calendar year 2019
Inspired Entertainment, Inc. ("Inspired" or the "Company") (NASDAQ: INSE), a leading B2B provider of gaming content, systems and solutions, announced today that it has acquired Sportech Lotteries, Inc. ("Sportech Lotteries"), a subsidiary of Sportech PLC ("Sportech") (LSE: SPO.L). The principal asset of Sportech Lotteries is the lottery systems contract to provide online and retail lottery services, as well as the upcoming launch of Sportech's iLottery solution, to Loteria Electronica Internacional Dominica S.A. ("LEIDSA") of the Dominican Republic. The current lottery systems contract with LEIDSA had been scheduled to run until March 9, 2025. Concurrent with closing of the acquisition of Sportech Lotteries, Inspired and LEIDSA extended the lottery systems contract through March 9, 2035.
This marks Inspired's first acquisition in the lottery sector, further diversifying its business model on a product, customer and geographic level. It is expected to provide additional growth opportunities in North America, a key strategic geography for the Company, bolster the Company's positioning in the growing iLottery market and enhance the Company's ability to offer a platform with a full turnkey lottery/iGaming solution to new customers in the future, in line with its cross-platform approach.
"This acquisition accelerates our entry into the lottery business, where, as a management team, we have extensive collective experience and long-standing relationships," said Lorne Weil, Executive Chairman of Inspired. "We expect to build on Sportech's established lottery supply contract to increase our scale and scope within the lottery and gaming ecosystem. We are excited to enhance the value proposition we provide to operators and consumers as we seek to realize on significant opportunities in the sector."
Weil continued, "LEIDSA is one of the largest and most successful lotteries in Latin America. Beyond the immediate potential in the Dominican Republic, we anticipate that the lottery systems platform can be further enhanced in order to accelerate the path of our strategic objectives in the worldwide online and retail lottery market."
Inspired acquired Sportech Lotteries for US$12.5 million on a cash free/debt free basis, subject to certain customary adjustments and up to US$2.0 million of potential additional earnout consideration. The upfront consideration represents a multiple of approximately 4.0x Sportech Lotteries' unaudited Adjusted EBITDA1 of US$3.1 million for the LTM ended June 30, 2021, and 3.5x Sportech Lotteries' unaudited (pre-COVID) Adjusted EBITDA1 of US $3.5 million for calendar year 2019. This acquisition was funded with cash from Inspired's balance sheet.
LEIDSA is a private lottery operator in the Dominican Republic that has offered electronic lottery products (draw games, Keno, etc.) as well as a host of other services since the lottery's inception in 1997. In conjunction with the acquisition, Inspired will control Sportech's Quantum™ System for LEIDSA, which supports more than 2,100 land-based outlets as well as software and field service support. Inspired will also license Sportech's Lot.to system, an omni-channel iLottery solution that manages the entire lottery business from the cloud, which is currently undergoing testing with LEIDSA to launch digital lottery sales during 2022.