Founded in Malta in 2014, Royal Panda worked hard to gain a loyal customer base. They aimed their business fairly squarely at a UK market as soon as the gained a UK Gambling Commission license allowing them to do just that. Now Royal Panda’s parent company, Web Investments Limited, has been bought by LeoVegas International Limited. That is, as the name suggests, the company behind the gambling site LeoVegas.
LeoVegas is a Swedish company that has been keen to make further inroads into the lucrative British market, with the purchase of Royal Panda helping them to further their cause. In the third quarter of 2017, Royal Panda saw 50% of all of its revenue come from the UK market. LeoVegas, meanwhile, began life as an online casino provider back in 2011 and made a name for itself by offering customers a ‘mobile first’ experience. That the company has developed to their point where they can completely buyout an online rival is impressive.
How Much Is The Deal Worth?
LeoVegas will pay an initial amount believed to be €60 million for Royal Panda. There is another €60 million in ‘earn-out payments’ available, should Royal Panda hit certain targets. These include at least €50 million in net gaming revenues and a further €12 million in Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) being achieved within twelve months of the takeover.
To further the idea that LeoVegas is predominantly buying Royal Panda because of the in-roads the company has made into the British market, at least €34 million of those €50 million in net gaming revenues and €5 million in EBITDA has to come from the United Kingdom. It is expected that deal to buy Royal Panda will be completed by December of 2017.
What Does This Mean For Royal Panda Customers?
Whenever such an acquisition as this takes place, the natural question for customers of the company being bought is ‘what happens to me?’ The answer is, ‘not very much’. Speaking to shareholders, LeoVegas CEO Gustaf Hagman suggested that the two companies would continue to exist alongside each other. He said, “With the help of the strong symbolic value in the panda, the company has built a premium brand among gamers, and we will complement LeoVegas with Royal Panda. This gives us two great brands with global appeal, which makes the scalability in the continued growth strong while strengthening our position in the UK”.
That means that, in the immediate term at least, you don’t need to worry about your Royal Panda account. It might be that, in the coming years, customers are gradually moved over to LeoVegas. A similar thing is due to happen to Stan James customers this year after the bookmaker was bought by Unibet. For now, though, Hagman seems to be telling the company’s investors that Royal Panda will keep operating as a separate entity from LeoVegas, apart from when it comes to the financial situation behind-the-scenes.
What Does The Future Hold For LeoVegas AB?
It seems as though this is merely the start of a program of mergers and acquisitions for the Swedish company. As part of a strategy along those lines, a €100 million debt financing transaction has been obtained by the LeoVegas governance. 40% of that €100 million will be available through a revolving credit facility.
When it comes to the more immediate future, Gustaf Hagman believes that marketing costs will go up when compared to revenue. He said, “We will most likely reach the highest level during the year as we plan to invest ahead of the Christmas holiday season”.
Hagman was, understandably, buoyant about the company’s future when updating stakeholders in October. He said, “With a great acquisition, a good start to the fourth quarter and a continued strong cash position, we continue to have tremendous opportunities going forward, and we are all looking forward to an exciting fourth quarter”.
Little wonder that Hagman seems so delighted with the progress of the company that he helped to set up. The LeoVegas Group’s revenue made it as high as the €55 million mark by the third quarter of 2017, with KPI gains across the portfolio. Adding a further name to bolster the company’s multi-market brand will only help on that front.
What Does Royal Panda Bring To LeoVegas?
Aside from the already mentioned access to a predominately UK-based customer list, what else does Royal Panda offer LeoVegas that has made it such an appealing acquisition? For starters, the company has a proprietary technical platform that is mainly focused on its online casino, though the fact that Royal Panda has also launched a sportsbook recently is worthy of a mention here.
The LeoVegas hierarchy obviously feels that Royal Panda’s overall brand inspires confidence in its customers, with Hagman specifically referencing that when he said, “With the help of the strong symbolic value in the panda, the company has built a premium brand among gamers”.