Social game provider SciPlay said Monday it acquired a developer of casual mobile games, giving the Scientific Games spin-off an opportunity to enter a fast-growing segment in the mobile gaming universe.
SciPlay, which is almost 83% owned by Scientific Games, didn’t disclose the price in acquiring Come2Play, an Israeli based developer games such as “Solitaire Pets Adventure,” and “Backgammon Live,” the leading backgammon social game on the market.
In a statement, SciPlay said the transaction closed Monday and did not impact the company’s liquidity position, which is more than $300 million with no debt on the balance sheet.
SunTrust Robinson gaming analyst Matthew Thornton estimated the deal value in “the low double-digit millions” based on Come2Play’s revenue base. He told investors the deal met with SciPlay’s strategy of bringing in new products.
“Adding a new genre of evergreen casual games and an incredibly talented team to our portfolio immediately expands our market beyond social casino apps,” SciPlay CEO Josh Wilson said in a statement. “(The purchase) enables us to leverage our unique technology and strategies to drive player engagement and grow revenue. We believe … we will be able to drive new growth behind the Come2Play titles.”
SciPlay and other social gaming companies benefitted from coronavirus-influenced shutdowns of casinos nationwide. SciPlay said its cash flow grew 39% in the first quarter and the company saw revenues jump 20% during April.
Since its May 2019 spin-off, SciPlay been looking for acquisitions to expand its portfolio outside of social casino games, where the company is able to utilize a library of Scientific Games slot machine and table game titles.
“This acquisition appears to fit in well with the SciPlay strategy,” Macquarie Securities gaming analyst Chad Beynon said in a research note. “In general, the mergers and acquisitions landscape has accelerated with Zynga’s recent $1.8 billion acquisition of Peak.”
Social gaming involves online versions of the industry’s most popular slot content – or original games, in some cases – played for free on a mobile device or desktop computer. Players use virtual tokens to play the games. For nominal fees, however, players can increase their bankroll by purchasing additional tokens.
Beynon told investors SciPlay is similar to a traditional software company with a potential for a double-digit cash flow multiple.
The balance sheet strength portends well for future M&A that increases the company’s global presence in this emerging market,” Beynon said.
Come2Play is headquartered in Tel Aviv, Israel with additional development offices in Poltava City, Ukraine.
“By leveraging the expertise and support from the wider SciPlay team, we will amplify the reach of our games,” said Come2Play CEO Alon Barzilay. “We couldn’t be more thrilled for the future.”
Shares of SciPlay, traded on the Nasdaq, closed at $14.25 in trading Monday, up 29 cents or 2.08%. Scientific Games shares, also traded on the Nasdaq, closed at $16.26, up 5 cents or 0.31%.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter
