Cherry acquires outstanding Game Lounge shares

Swedish gaming company Cherry has increased its stake in affiliate firm Gaming Lounge, taking its total holding to 95%.

Three years after its wholly owned subsidiary, Cherry Malta Ltd, acquired 51% of the shares in the company, the gaming group has resolved to take onboard a further 44% that will be financed through a combination of cash and a new issue of shares.

Shares remaining following the acquisition are to be held by the founders of Game Lounge, with the individuals also set to stay on as the company’s Head of Sales and Chief Executive Officer respectively.

Anders Holmgren, CEO of Cherry, said: “Game Lounge holds a strong position in a growing market. In the third quarter 2017, Game Lounge continued to grow, and revenue amounted to MSEK 45, an increase of 180 percent compared with the third quarter 2016. EBITDA margin amounted to 75 percent.

“Game Lounge’s business model is remarkably scalable, the company has unique capabilities in search-engine optimization (SEO) and is the recognized standard in affiliation within the gaming industry.

“We see great potential to expand the scope of the business to also include other segments, such as the loan affiliate website Lainat.fi, acquired by Game Lounge in November.”

Cherry has stated that the purchase price is based on a multiple of 4.5 times the 2017 profit of the affiliate operation and 6 times the 2017 profit of the white label operation.

Adding that ‘the cash portion is to be disbursed before 30 April 2018 and the new issue must be settled by the Cherry AB Annual General Meeting in May 2018, after which the transaction is expected to be closed.’