Aristocrat to offload video game developer Plarium Global to Swedish company
Aristocrat Leisure will sell its Plarium Global business to a Swedish group for more than $1bn so it can focus on its core gaming machine and online operations.
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Aristocrat Leisure has signed a deal to sell its Plarium Global business to a Swedish group so it can focus on its core poker machine and online casino-style operations.
Global mobile-first gaming company Modern Times struck a deal for Plarium for a deferred price of $US820m ($1.25bn).
The agreement is through Aristocrat’s subsidiary Pixel United.
It includes fixed consideration of $US620m, with the potential to receive a further $US200m, subject to the achievement of certain financial targets over 2025 to 2028.
The poker machine giant told the ASX the proceeds from the transaction would be deployed to fund the group’s longer term growth strategy, in line with its capital allocation framework in land-based gaming, real money gaming and social casino opportunities.
Aristocrat said its strategic review with regard to the potential sale of its Big Fish Games – excluding the Big Fish Social Casino assets – was continuing with the group actively engaging with third parties. It told the ASX that it has separately written down the value of the free-to-play mobile games business by $US110m.
Big Fish Games and Plarium Global are makers of games with in-app purchases that do not require a licence to operate. Aristocrat paid about $US1.5bn for both in 2017.
Aristocrat said it expected the sale of Plarium to reduce normalised profit after tax and before amortisation of intangibles by high single-digit percentage points annually. It is due to release its financial results on Wednesday for the full year ending September 30.
Shares initially surged to a record high of $66.10 in opening trade before easing to close 1.04 per cent down at $64.93.
Aristocrat said Plarium – which was behind the popular squad battler RPG RAID: Shadow Legends game – generated an internal rate of return in the mid-teens during the period of its ownership.
Aristocrat chief executive Trevor Croker said the Plarium sale followed a strategic review of the company’s casual and mid-core gaming assets.
“With the expanded Aristocrat Interactive business now sitting alongside Aristocrat Gaming and our market-leading mobile social casino business, we are increasingly focused on opportunities to lean into Aristocrat’s strengths in regulated gaming content and social slots,” he said.
“Aristocrat has incorporated a range of Plarium’s strategic capabilities and mobile content know-how into its core gaming operations over the past seven years, benefiting from digital marketing and UA (user acquisition) management capability, enhanced live operations, and scaling and growing our combined social casino business.”
In the unaudited financial results for the year to September 30, Plarium contributed $US615m to revenue and $US166m to segment profit. Earnings before interest, tax and amortisation but after design and development expenditure were about $US110m.
Aristocrat said it expected the sale of Plarium to be mid to high single-digit percentage points dilutive to net profit after tax in FY25 on an annualised basis.
The transaction will close in the first half of calendar year 2025 and is subject to customary closing conditions, including receipt of regulatory approvals.
Analysts at Citi said they had previously estimated sale proceeds of $1.7bn to $2.3bn but noted downside risk bias to this range as the bookings data weakened.
“Moreover, there still remains the Big Fish social casual portfolio to divest,” the bank said in an analyst’s note.
“We estimate this generates revenue of $US125m and could generate further sale proceeds of $50m to $100,
“Our FY25 forecasts for digital were well below consensus. Therefore, this sale removes our key bear point on the stock. We will review our forecasts post Aristocrat’s FY24 result (on Wednesday).”
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Originally published as Aristocrat to offload video game developer Plarium Global to Swedish company
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