December 10th, 2007 by Arjan Olsder Posted in Companies & M&A | No Comments »
Pacificnet has acquired 100% of Octavian International Ltd., a gaming technology company based in the United Kingdom.
The transaction is subject to various conditions, including the completion of due diligence, which has already commenced. PacificNet will issue restricted shares of PACT representing approximately 19.5% of PacificNet’s outstanding shares. There is also an additional cash performance bonus.
Octavian had a revenue of approx $64.6 million, gross profit of approx $18.4 million, EBITDA of approx $6.2 million USD, and pre-tax profit of $5.5 million, for fiscal year ending Dec 31, 2006.
Octavian will continue to work under it’s own name. Harmen Brenninkmeijer would become an executive director of PacificNet and a member of the board of directors, and continue to serve as CEO of Octavian. Furthermore, upon completion of the earn-out provisions and profit targets as defined in the acquisition agreement, Harmen Brenninkmeijer would become President of PacificNet’s Global Gaming Division. The acquisition would be completed along Q1 2008.
Commenting on the deal, Tony Tong, CEO of PacificNet, said: "We are very excited at the prospect of adding Octavian’s global gaming brand name and distribution channels to PacificNet’s gaming strategy. The acquisition fits well within our key focus of garnering long-term, high-margin, recurring revenue contracts in emerging gaming markets worldwide and will have a synergistic effect by combining Octavian’s strong global brand name and worldwide gaming distribution expertise with PacificNet’s low-cost development resources in China and local Asian gaming expertise. We are confident that Octavian’s product portfolio and global growth strategy is an extremely good fit with PacificNet’s."
Harmen Brenninkmeijer, CEO of Octavian, added: "Being part of a company with the market presence and profile of PacificNet would significantly enhance Octavian’s global growth potential. We project major growth worldwide in gaming systems because of the potential for the technology’s flexibility in creating multiple gaming configurations including downloadable games and more engaging and customer-friendly games. As part of PacificNet, and working closely with PacificNet and its subsidiaries, Octavian would be extremely well placed for strong growth in existing and new markets. In addition, Octavian would add market-leading technology, software and experience in the rapidly-expanding lottery market to the PacificNet portfolio. I believe there would be a lot of synergy between Octavian and PacificNet which we all hope can be transformed into strong revenue and EPS growth, cost savings, Euro-Asia gaming coverage, shared technical resources and distribution channels, and ultimate investor value enhancement for all."
"We are very excited about working with Octavian," said Victor Tong, President of PacificNet. "We see huge potential for growth in the global gaming market. Working with Octavian allows PacificNet to accelerate its gaming expansion and sharpens its focus in the high margin gaming technology business. Octavian’s experienced creative development teams are able to create proven games that are tailored to individual jurisdictions and are highly cost-effective. Also, Octavian has a well-proven, robust and flexible systems offering. Its ACP slot management system currently links tens of thousands of gaming machines into efficient networks that offer highly attractive multi-machine jackpot games. To this Octavian has recently added leading-edge casino reception and cash desk systems, which provide a complete end-to-end systems solution for today’s modern casinos. In addition, we see strong synergistic development between Octavian and our other subsidiary companies in the areas of gaming product development, R&D, marketing and distribution, and geographical coverage. We believe this acquisition will greatly increase our overall gaming revenues, bottom line, and enhances our shareholder value."
