Stockholm-listed gaming operator Cherry has agreed to acquire an additional 44 per cent shareholding in affiliate business Game Lounge.

The agreement will see Cherry raise its stake in the business to 95 per cent, following its acquisition of an initial 51 per cent stake in January 2015. The remaining 5 per cent will be held by the founders of Game Lounge, who will also stay on as the company’s head of sales and chief executive officer.

The purchase price for the additional shares is based on a multiple of 4.5x the 2017 profit of the affiliate operation and 6x the 2017 profit of the white label operation, with the acquisition expected to be financed through a combination of cash and newly issued shares in Cherry AB.

Game Lounge generated third quarter 2017 revenue of SEK45m (approx. €4.5m), an increase of 180 per cent year-on-year, with an EBITDA margin of 75 per cent.

“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 and we see great potential to expand the scope of the business to also include other segments, such as the loan affiliate website, acquired by Game Lounge in November,” said Cherry chief executive Anders Holmgren.

Shares in Cherry AB (STO:CHER-B) were trading down 1.22 per cent at SEK48.40 per share.