Online gaming performance marketing provider Raketech has completed the acquisition of data-driven igaming affiliate network Lead Republik for €1.4m (£1.2m/$1.6m).
The purchase price represents a multiple of approximately three times Lead Republik’s earnings before interest, tax, depreciation and amortisation for the past 12 months, as well as half of revenue over the last year.
The acquisition deal, which will see Lead Republik's staff join Raketech, also comes with additional earn-out payments based on a number of performance measures. Part of this earn-out, based on performance to 28 February 2021, is capped at €0.3m, while a further earn-out based on future perfromance to the same date in 2022 is not subject to any restrictions.
Registered in Malta, Lead Republik draws most of its revenue from Canada, New Zealand and Germany. As a result of the acquisition, Raketech said its revenue from outside the Nordics is expected to reach around 20% of the group total.
Raketech also noted that paid media, which is a large portion of revenue from Lead Republik, is expected to lower EBITDA margin for the group slightly.
“This acquisition is ticking a lot of strategic boxes, as it gives us further footprint in markets important for our key partners at the same time as it contributes with technical know-how in form of a high qualitative technical platform together within competence within conversion optimisation and paid media,” Raktech’s chief executive Oskar Mühlbach said.
“We further see strong synergies when combining Lead Republik’s offering with our know-how, within organic search,”
“I am furthermore really glad to have the brilliant Lead Republik team on board and to be able to conclude that the sellers will continue their involvement for the upcoming 12 months in order to secure a smooth handover and accelerate further expansion into new markets.”
The acquisition is effective from today (11 March), with Raketech to fund the purchase using cash on hand.
The deal comes after Raketech last month reported a year-on-year increase in profit for 2019, despite new regulations in Sweden pushing revenue down.
Total revenue at Raketech for the 12 months to 31 December 2019 amounted to €23.9m, down 6.5% from €25.6m in the previous year, while operating costs climbed 23.6% year-on-year to €17.8m.
However, while lower revenue and higher costs pushed operating profit down 45.5% to €6.1m, when taking into account $2.3m in other non-operating income, which related to party liability that was waived in Q1 of 2019, profit before tax was up 54.2% to €7.4m.,