Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National” or
the “Company”) announced today that it acquired Rocket Games, Inc.
(“Rocket”), a leading developer of social casino games, for
approximately $60 million cash, subject to working capital and
other adjustments, including potential earn-out payments for
certain members of the Rocket Games management team. The earn-out
payments over the next two years will be based on a multiple of
6.25 times Rocket’s then-trailing twelve month earnings before
interest, taxes, depreciation and amortization (“EBITDA”), subject
to a cap of $110 million for the earn-out. The transaction is
expected to be immediately accretive to Penn National’s operating
results.
Founded in 2013 by game developers Bill Gelpi (Chief Executive
Officer) and Steven Jian (Chief Technology Officer), the management
team was rounded out in 2014 by fellow Zynga veterans Niko Vuori
(Chief Operating Officer) and Justin Cooper (Chief Content
Officer). Today Rocket has a team of over 30 employees based in its
San Francisco office. Rocket was recognized by industry experts
Eilers & Krejcik Gaming as the fastest growing social casino
company in 2015, growing by over 500% and reaching a top-15
position globally in the growing social casino gaming segment,
partially based on its leadership position in the rapidly growing
classic 3-reel mechanical slots genre (3RM). Rocket generated
approximately $5.6 million of operating EBITDA during the six month
period ended June 30, 2016.
Rocket’s library of over 50 social casino games feature hits
such as Viva Slots Las Vegas, Downtown Deluxe Slots, Triple Double
Slots and Vegas Jackpot Casino, along with popular licensed titles
such as Popeye Classic Slots. Rocket’s social slot games are
available on the iTunes App Store, the Google Play store, on Amazon
and via Facebook. Following the transaction Rocket will continue to
be headquartered in San Francisco and its existing management
team will continue to run day-to-day operations.
Penn National Gaming President and CEO, Timothy J. Wilmott,
commented, “Penn National’s accretive acquisition of Rocket
highlights our ongoing strategic initiative to acquire emerging
growth platforms that complement, and allow us to leverage, our
core regional gaming operations and database of over three million
active customers.
“Since the separation of our gaming assets from our real estate
assets in 2013 we have been highly focused on a broad range of
growth and diversification initiatives. Launched last year, Penn
National’s Hollywoodcasino.com and Hollywoodslots.com social casino
offerings have been very well received by players, are profitable
and serve as effective customer acquisition tools for our
operations. Based on our internal analysis, a significant segment
of Penn National’s database customers actively participate in
social and online gaming, and we believe there are meaningful
operating and revenue synergies between Penn National’s operations,
our Hollywoodcasino.com and Hollywoodslots.com social casino
offerings and Rocket’s operations that will drive near- and
long-term growth for our shareholders.”
Chris Sheffield, Senior Vice President and Managing Director of
iGaming at Penn National Gaming, added, “We are excited to acquire
a best-in-class social casino game developer in a transaction that
greatly expands our in-house capabilities and further diversifies
our portfolio of leading gaming entertainment assets. Rocket’s
growth and industry and consumer acclaim over the past 12 months is
impressive given their lack of funding from outside investors or
access to the resources and experience of an established casino
operator.
“Rocket’s flagship game ‘Viva Slots Vegas’ is mobile casino
gaming’s ‘classic slots’ leader, having attracted a growing
audience of over 200,000 average daily active players, and we
believe Rocket provides Penn National with an effective platform to
further cross promote our already successful social and online
operations as well as our existing portfolio of regional gaming
properties.
“Our internal research confirms that social and online gaming is
highly complementary to our core regional gaming operations and a
key component of our gaming entertainment offerings whose
importance grows each day. This acquisition will provide a highly
accomplished team, content and platform to rapidly grow our
footprint in this space and engage with our customers, building
loyalty and retention while serving as a significant channel for
new customer acquisition.”
Bill Gelpi, Chief Executive Officer of Rocket, added, “The
entire Rocket team is delighted to join the Penn National family
and leverage their expertise and nationwide reach to take our game
development capabilities and company growth to the next level.
Social and online gaming is an extremely attractive segment of
mobile and online gaming, and tying our innovative gaming expertise
to a traditional casino operator with a qualified database of
customers will create unmatched opportunities for both Rocket Games
and Penn National.”
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests
in gaming and racing facilities and video gaming terminal
operations with a focus on slot machine entertainment. At June 30,
2016, the Company operated twenty-seven facilities in seventeen
jurisdictions, including Florida, Illinois, Indiana, Kansas, Maine,
Massachusetts, Maryland, Mississippi, Missouri, Nevada, New Jersey,
New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario.
At June 30, 2016, in aggregate, Penn National Gaming operated
approximately 33,400 gaming machines, 800 table games and 4,600
hotel rooms.
Penn Interactive Ventures (PIV) is the interactive division of
Penn National Gaming operating out the Company’s offices in
Conshohocken, a suburb of Philadelphia. The business markets and
supports a portfolio of innovative iGaming products including
www.hollywoodcasino.com (online and mobile free slot games provided
by Scientific Games), HollywoodSlots.com (Mobile and Facebook
social free casino apps developed by OpenWager) and
Hollywoodraces.com (an advance deposit wagering platform provided
by Sportech PLC).
About Rocket Games
Developing for online, social and mobile markets, Rocket Games
is a social casino game developer operating primarily in the North
American market. The company, founded in 2013, is based out of San
Francisco and operates a portfolio of over 50 slots titles. With
more than 800,000 daily active players, Rocket Games is one of the
largest independent social casino game developers in the world. For
further information visit http://rocketgames.com or
http://vivaslots.com or Twitter: @rocketgames
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified by the use of forward
looking terminology such as “expects,” “believes,” “estimates,”
“projects,” “intends,” “plans,” “seeks,” “may,” “will,” “should” or
“anticipates” or the negative or other variations of these or
similar words, or by discussions of future events, strategies or
risks and uncertainties, including future plans, strategies,
performance, developments, acquisitions, capital expenditures, and
operating results. Actual results may vary materially from
expectations. These forward looking statements are inherently
subject to risks, uncertainties and assumptions about Penn National
Gaming and its subsidiaries, including risks related to the
continued profitability of Rocket and our other social gaming
endeavors, the retention of certain key employees, cyber security,
data privacy, intellectual property rights, and legal and
regulatory challenges, and, accordingly, any forward looking
statements are qualified in their entirety by reference to the
factors discussed in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2015, as well as any subsequent
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
each as filed with the United States Securities and Exchange
Commission. The Company does not intend to update publicly any
forward-looking statements except as required by law. In light of
these risks, uncertainties and assumptions, the forward-looking
events discussed in this press release may not occur.
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version on businesswire.com: http://www.businesswire.com/news/home/20160803005484/en/
Penn National Gaming, Inc.Saul V. Reibstein, 610-401-2049Chief
Financial OfficerorJCIRJoseph N. Jaffoni, Richard
Land212-835-8500penn@jcir.com
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