BetandWin Bids to Acquire Ongame

9 December 2005

The next big sign of consolidation in the I-gaming industry could be the acquisition of Ongame e-solutions AB—the Sweden-based developer of online gaming technology and operator of—by Austria-based betting and gaming operator Interactive Entertainment AG. The two companies have entered into a Memorandum of Understanding, and discussions are currently in a preliminary phase, with neither firm wishing to disclose an asking price to the public.

In addition to developing online poker and casino software games that are licensed to third party providers, Ongame also operates its own gaming properties that utilize its own technology, including and—the world's third largest online poker site. The company's Ongame Network, which aggregates the players of all of its own sites and those of its poker software licensees, has over six million registered users. Ongame also offers a real money multiplayer poker solution for mobile devices.

BetandWin, on the other hand, is for the most part purely an online gambling operator that is licensed in Gibraltar. The company is a dominant player in Europe, offering sports betting, casino, poker, and soft games in 16 different languages. At the moment the company is aggressively targeting Austria, Germany, Turkey, Greece, Poland and Spain in an effort to gain a firm grasp on the market before its international competitors step up their expansion plans.

BetandWin has virtually no presence in North America, but if it were able to acquire Ongame it could absorb's massive American player-base.

"In our clear aim to become the global leader of this industry, complementary acquisitions to our core business are key as organic growth alone will not suffice to reach the necessary critical size in time," said Manfred Bodner, CEO of BetandWin. "Ongame fits all criteria of our acquisition strategy and might well become one of these steps in our development."

Initial expectations are that the deal's figure could be around the neighborhood of 500 million euros (US$590 million), but neither company is disclosing any values.

Ongame is one of the many companies in the I-gaming space that has been planning a float on the London Stock Exchange in 2006. In 2004 Ongame reported $52 million in revenue with a pretax profit of $40 million. Swedish weekly business magazine Veckans Affarer named Ongame IT Company of the Year for 2005. The company is advised by HSBC Bank Plc on various aspects of the potential transaction with BetandWin.

Listed on the Vienna Stock exchange, Betandwin recorded recorded $891 million in turnover, $114 million in gross gaming revenues, $10 million in EBITDA and $1.7 million in profit before taxes during the first nine months of 2005. BetandWin is advised by Dresdner Kleinwort Wasserstein on various aspects of the potential transaction.