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Playtech Acquires Euro Partners Affiliate Program

By: Mark Freedman, Saturday March 12th 2011
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While announcing its annual results, the leading online gaming software provider Playtech also informed investors of its acquisition of Euro Partners. Euro Partners is one of the largest affiliate programs in the online casino industry. The acquisition was made in a slightly roundabout way. Playtech founder Teddy Sagi owns PT Turnkey Services (PTTS), which in turn is the holding company for Euro Partners. Playtech paid Sagi €140 million in cash for PTTS. Further payments are due up to 2014 depending on the performance of PTTS. PTTS earned revenues of €90 million last year. Because of this deal the earnings of PTTS are likely to by more than 13% by 2012. On present estimates it is expected that the total outlay of Playtech for this purchase could go up to €280 million.

Euro Partners has more than 50,000 affiliates on its network, making it one of the most powerful marketing, acquisition and retention businesses in the online gaming industry. Therefore this acquisition will strengthen Playtech's position as a single source supplier of online gaming solutions to new entrants in regulated and soon-to-be-regulated markets. The current Euro Partners licensees include some big operators in the online casino industry, such as Casino Tropez, Europa Casino, Titan Casino and Vegas Red Casino. It is in advanced discussions with a number of additional potential licensees.

After the presentation of the annual results Playtech chief executive Mor Weizer said the acquisition of Euro Partners would give Playtech direct contact with operators and also direct communication between the operators and their customers. He however clarified that this deal would not classify Playtech as a fully fledged operator. Hence there was no danger of it becoming eligible for additional taxation in various markets. Weizer said, "Euro Partners will allow us to establish ourselves in and act as a marketing channel into various markets. On top of that you have proactive customer service that is pure retention, customer service and support, and hosting and payment advisory." The objective is to provide new local brands with access to best software, marketing channels and the affiliates in the online gambling industry. Weizer pointed out that this is a huge advantage for the new local brands and a huge platform for growth for Playtech.

The formalities associated with the acquisition have yet to be completed but this is expected to be done by the end of June 2011 without any problem. Full integration of the businesses is expected in the fourth quarter of this year. Playtech reported another successful financial year with revenues growing 24% from €114.8 million in 2009 to €142.3 million last year. Profits rose 4% from €89.4 million to €93.2 million.

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