Aristocrat Lands Big Fish, Investors Unimpressed
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Aristocrat Leisure will become the second biggest social casino gaming company in the world, after agreeing to pay $1.3 billion for United States social gaming company Big Fish.
Aristocrat confirmed it will pay Big Fish’s parent company Churchill Downs $US990 million ($A1.3 billion) for the company, while at the same time reporting its biggest ever profit of nearly half a billion dollars for the year to September.
It takes to nearly $A2 billion the amount the company has spent expanding. in August newish CEO, chief executive Trevor Croker paid $US500 million ($A677 million) for Israeli social gaming company Plarium in August.
But investors weren’t impressed, the sold down the Aristocrat shares by more than 6% to a closing $21.99 as analysts fretted about the two big costly deals coming so close together.
The latest deal will double Aristocrat’s digital revenues to about $651 million a year, pushing the total towards the $3 billion a year mark.
Big Fish makes the popular Big Fish Casino game, as well as social gaming titles like Gummy Drop! and Fairway Solitaire.
Plarium makes digital strategy games such as the popular Vikings: War of Clans, which Mr Croker said would complement the poker machine manufacturing and online gaming giant's existing businesses.
Mr Croker claimed the "strategic and financial benefits from the acquisition are highly compelling" and that Big Fish's "strength in casual and card games is highly complimentary to Plarium's strategy games portfolio."
Aristocrat also announced record net profit after tax of $495 million, up 41% from the previous year on a 15% rise in revenue to $2.4.5 billion for its 2017 financial year.
The company will pay a 20 cents a share final dividend, up from the 15 cents a share paid for the 2015-16 year final. The higher payment takes the 2016-17 total shareholder payout to 34 cents a share, up from 25 cents previously.
The company said the higher revenue and profit came from strong growth in the Americas and significant growth its digital business (hence the attraction of the Big Fish acquisition).
The poker machine supplier said it anticipates continued growth in fiscal 2018.
CEO Croker says Aristocrat has delivered high-quality results over the year despite mostly flat markets and increasing competition.
"Industry-leading content, hardware and technology, coupled with effective execution focused on our highest-value opportunities, once again underpinned our performance," Mr Croker said in a statement on Thursday.
"Going forward, Aristocrat will continue to target high-quality growth, with the benefit of our established performance momentum, broadening capabilities, strong balance sheet and growing recurring revenue base."
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.