Playtech buys online bingo firm Virtue Fashion

LONDON (Reuters) - Online gaming software firm Playtech said it had bought online bingo company Virtue Fashion for up to 36 million pounds to strengthen its offering in online international bingo markets.

The company said on Monday it would pay an initial 29 million pounds in cash plus up to 7 million pounds in the first four months of 2011 based on Virtue Fashion’s performance in 2010.

Online poker and casino operator Playtech said it expected the deal, which sees it gain new licensees to add to its own bingo offering, to be earnings accretive in 2010.

It said that bingo was one of the fastest growing segments in online gaming in 2009 and that the deal would provide it with cross-selling opportunities.

Playtech Chief Executive Mor Weizer said in a statement that online bingo had found early favour with regulators.

“We see this acquisition as not only furthering what is already Playtech’s competitive advantage in the growing online gaming market as a whole, but as having the potential to generate meaningful opportunities in newly regulated markets,” Weizer said.

Virtue Fashion, which has more than 20 licensees including well known brands such as William Hill, Ladbrokes and Paddy Power, had a turnover of 12.3 million pounds and adjusted earnings before interest tax depreciation and amortisation of 3.8 million pounds in 2009.

A combination of industry growth, a good trading update at the end of January and some interesting partnerships and acquisitions has helped lift Playtech’s shares by 21 percent in the last three months, said Daniel Stewart analyst James Hollins.

The broker has a “buy” recommendation on the stock and raised its target price on Playtech to 625 pence from 602 pence.

Shares in Playtech were up 2.1 percent to 477 pence at 9:28 a.m., valuing the company at about 1.15 billion pounds.

Reporting by Sarah Young; Editing by Jon Loades-Carter