International Game Technology (IGT) announced today it is selling Double Down Interactive to South Korea’s DoubleU Games for $825 million. The deal is part of a new strategic partnership in social casino games between the two companies.
It’s a good deal for IGT, which is the world’s largest slot machine maker. It paid $500 million in 2012 to buy Double Down Interactive, which at the time had just 70 employees but was on the leading edge of the explosion in demand for social casino games on Facebook.
Seoul-based DoubleU games will partner with IGT over multiple years to promote social casino games around the world.
“Since acquiring DoubleDown in 2012, IGT has grown it into one of the largest and most successful brands in the North American social casino market,” said IGT CEO Marco Sala in a statement. “After several years of strong, organic growth and increasingly attractive valuation levels, the time is right for us to maximize the value of this asset for our shareholders. We will continue participating in the growth of the social casino market through our multi-year, strategic partnership with DoubleU Games.”
The sale is subject to customary closing conditions, including regulatory approvals. It should be completed in the second quarter of 2017.
The cash purchase price, $825 million, represents 10.5 times DoubleDown’s full-year 2016 adjusted earnings before income taxes, depreciation and amortization (EBITDA), a measure of profitability. Proceeds from the transaction will go toward general corporate purposes, including debt reduction. IGT will provide an updated financial outlook that includes the full impact of this transaction in late May, in conjunction with its first quarter of 2017 results.
“This transaction represents a unique and value-accretive partnership combining the operational excellence of DoubleU Games with IGT’s world class slot content,” said Ga-Ram Kim, CEO of DoubleU Games, in a statement. “With this partnership, we are excited and confident about DoubleU Games’ future as a global leader in social casino.”
Upon the closing of the sale, the parties will enter into a game development, distribution and services agreement that will enable DoubleU Games to offer IGT’s extensive casino game library on DoubleU Games’ combined social casino platforms, in exchange for ongoing royalties to IGT.
The Raine Group and Credit Suisse International are acting as financial advisors to IGT, and Wachtell, Lipton, Rosen & Katz and Cooley LLP are providing legal counsel. Deutsche Bank is acting as financial advisor to DoubleU Games, and Kim & Chang and Morgan Lewis & Bockius are providing legal counsel.