Media Corp kicks off M&A drive with Purple Lounge buy 13/10/2009

Jon Parker

MEDIA CORPORATION (Media Corp), the AIM-listed advertising network and online publishing group, has bought online poker and casino business Purple Lounge and has pledged a string of further acquisitions.

UK-based Purple Lounge offers online casino, poker, and sportsbetting. Its casino and poker products are powered by Microgaming and are operated from UK white list jurisdiction Malta, allowing Media Corp to market its gaming services including its Gambling.com property into the UK after the acquisition.

Media Corp chief executive Justin Drummond (pictured) said that Media Corp plans acquisitions in sports betting and bingo worth “up to £10m,” and vowed to raise Purple Lounge’s present turnover of £16.5m to £50-100m within two years.

Drummond said: “This is a very synergistic deal. Historically we have never really had the gaming experience, and the software was OK but not top level. This deal allows us that expertise and the excellent Microgaming software, while for Purple Lounge, who have great CRM but are less good at attracting new players than retaining new ones, [the deal] will allow Media Corporation to drive new customers.

“By combining our marketing expertise with Purple Lounge's operational online gaming experience we hope to create a very profitable business.”

In the year to 31 May 2008, Purple Lounge made a pre-tax loss of £477,000 on revenues of £16.5m.

The maximum consideration for the purchase is £0.465m, all of which will be satisfied by way of an earn-out, payable over a period of up to five years. The earn-out payments will be calculated as 50% of the quarterly free cash flows generated by Purple Lounge, and can be satisfied by either cash or shares at the option of Media Corp.

Media Corporation was known as Gaming Corporation until 2006, when the business changed its name. The company was hit hard by America’s Unlawful Internet Gaming Enforcement Act (UIGEA), which effectively banned online gambling in the US.

Commenting on the planned M&A, Drummond said: “Gambling.com was worth £70m before UIGEA, and still has a lot of brand value. [Media Corp] is a listed business so we are not restricted in terms of size. We are looking for acquisitions in sportsbetting and bingo… of up to £10m.”

Following completion of the acquisition, the chairman of Purple Lounge, Chris Gorman OBE, has joined the board as a non-executive director of Media Corp with immediate effect. Gorman is a director and shareholder of Purple Lounge.

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Posted: 13/10/2009