Aristocrat (ASX:ALL) Sells Plarium in $820M Deal with Modern Times Group

3 min read | November 12, 2024 01:27 PM AEDT | By Team Kalkine Media

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Aristocrat (ASX:ALL) Sells Plarium in $820M Deal with Modern Times Group — Image source: shutterstock

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Highlights

Aristocrat Leisure’s subsidiary to divest Plarium Global in a major deal with Modern Times Group.

Transaction to bring $820 million, with a mix of upfront and contingent payments.

Focus shifts towards Aristocrat’s core gaming and social casino segments.

Aristocrat Leisure (ASX:ALL) announced a significant decision to divest its video game development company, Plarium Global, to Modern Times Group, a Swedish digital entertainment powerhouse. This strategic move by Aristocrat's subsidiary, Pixel United, comes as part of a broader strategy to focus on its core land-based gaming, real-money gaming, and social casino segments.

The transaction, valued at $820 million, includes an upfront payment of $600 million, with an additional deferred $20 million scheduled for April 2026. Furthermore, a potential $200 million contingent payment is tied to the achievement of specific financial performance targets over the 2025-2028 period, showcasing Aristocrat’s intent to derive long-term value from the transaction.

Aristocrat's CEO, Trevor Croker, emphasized the importance of this divestment as a milestone. He highlighted that this shift aligns with Aristocrat’s concentrated focus on leveraging strengths in regulated gaming content and social slots. The decision follows a strategic review undertaken earlier in the year to evaluate Aristocrat's assets in casual and mid-core gaming, with an emphasis on enhancing core segments. "With our expanded Aristocrat Interactive business alongside Aristocrat Gaming, we are increasingly focused on opportunities within regulated gaming content and social slots,” Croker shared, indicating Aristocrat's sharpened focus on core areas for future growth.

Acquired in 2017, Plarium has played a substantial role in Aristocrat’s growth, contributing approximately $615 million in revenue, $166 million in segment profit, and $110 million in EBITDA for the fiscal year ending September 2024. Its success has been instrumental in Aristocrat’s digital transformation, strengthening its mobile content expertise and strategic capabilities. This acquisition and growth track record underline Aristocrat’s ability to integrate and scale acquired businesses to drive digital advancements.

Following the completion of the sale, Aristocrat expects a minor dilution in net profit after tax for the 2025 fiscal year, estimated to be in the mid-to-high single-digit range. Despite this anticipated impact, the company remains optimistic that the divestment will support a robust revenue growth rate and improve margins in the long term.

Subject to regulatory approvals and other customary closing conditions, the transaction is expected to be finalized in the first half of 2025. This strategic move marks a shift in Aristocrat’s portfolio, reflecting a concentrated approach toward solidifying its leadership in core gaming sectors while streamlining its business.

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