The companies are understood to have been engaged in talks for some time, with Bally executives reportedly flying out to Israel to finalise the deal earlier this week.
Bally will pay approximately $51m in cash up-front and will also pay Dragonplay’s shareholders a sum in net working capital in exchange for all issued and outstanding equity in the company. It will then pay an additional $49m in earn-out considerations and employee retention payments, based on the studio hitting certain financial performance targets over the next 18 months.
The supplier expects to fund the deal from its cash reserves and proceeds from its revolving credit facility, with the acquisition to be closed in July. Bally expects the acquisition to be accretive to adjusted earnings per share for its 2015 financial year.
For the twelve months ending March 31st 2014, Dragonplay generated over $10m in earnings before interest, taxes, depreciation and amortisation (EBITDA) from reported earnings of $30m.
Bally chief executive Richard Haddrill noted that Dragonplay had managed to regularly top a number of performance charts on Google Play for more than three years, showing it could “acquire, monetize and retain social gamers by creating compelling games with staying power in the social casino space.”
The company has since expanded beyond its core Android platform, launching on Facebook and iOS. It has also expanded its product range with the launch of slot, bingo, casino and card apps, as well as a second poker game, and has nearly 3m monthly active users across its platforms.
“We expect this strategic acquisition to help position Bally at the forefront of social casino gaming by leveraging our world-class content, including proprietary table games and award-winning video slots, on Dragonplay’s increasingly popular social casino,” Haddrill added. “Additionally, with the majority of its revenues generated from smartphones and tablets, Dragonplay has proven remarkable foresight and leadership in the mobile space, which is the fastest growing segment of social gaming.”
Dragonplay was founded in 2010, and in 2012 secured $14m in Series A funding from Accel Partners.
The company’s founder and chief executive Sharon Tal said his company shared a “complementary culture focused on innovation and user experience” with Bally, revealing that the studio will redevelop the supplier’s content as free-to-play games.
“Both companies are committed to providing unique and stimulating content to players across the globe that enjoy playing entertaining casino-style games,” he explained. “I am confident that leveraging Bally’s vast library of proven slot and proprietary table game content will provide our loyal player base with an even more robust experience, which is expected to augment Dragonplay’s growth trajectory.”