US racetrack operator Churchill Downs announced that it has entered definitive merger agreements for the acquisition of mobile and social games developer Big Fish Games, Inc.
The company is preparing for a $885 million (£560 million) acquisition deal for the games developer, which will comprise of a $485 million base consideration and an attached earn-out payment of up to $350 million based on Big Fish Games future growth and value performance.
The base offer represents a multiple of approximately 8.5 times Big Fish’s adjusted 2014 EBITDA value $58 million. Churchill Downs has appointed Goldman Sachs as financial advisor for the acquisition of the mobile games developer.
Churchill Downs stated that the acquisition had been approved by both companies board of directors, and that it was currently awaiting for required regulatory approvals and other customary closing conditions to finalise acquisition proceedings. Subject to meeting the closing requirements, Churchill Downs would look to finalise the closure of the acquisition by the end of 2014.
“The acquisition of Big Fish and our entry into the rapidly growing mobile and online games industry gives us new products, new customers, new geographies and new sizeable growth opportunities,” said Bill Carstanjen, Chief Executive Officer of Churchill Downs
“While many will view this transaction as a logical extension to what we currently do with Twinspires.com, what is most important to us are the strong team and the processes and capabilities that have been built by Big Fish in Seattle, Oakland, and Luxembourg. We are excited to announce this transaction and believe we will do great things together.”
Paul Thelen, Big Fish’s founder and CEO said, “We are extremely proud of the company we have built over the last twelve years. Churchill Downs is a company with a commitment to interactive entertainment and a track record of growth and performance. We believe Big Fish is now positioned to become an even greater force in the casual, mid-core and social casino mobile and online games industry. Churchill Downs is a great cultural fit for us and we are thrilled to be joining the Churchill Downs family.”