April 18, 2017 - 11:37 am
Updated April 18, 2017 - 7:06 pm
International Game Technology has agreed to sell its social casino subsidiary for $825 million as it seeks to cut its debt, the Las Vegas-based company announced late Monday.
IGT’s sale of Double Down Interactive LLC to an affiliate of Seoul-based DoubleU Games Co. Ltd. is expected to be completed in the second quarter of this year. The sale price represents 10.5 times DoubleDown’s full-year 2016 adjusted earnings before interest, taxes, depreciation and amortization.
International Game Technology bought Double Down Interactive, a maker of games found on Facebook, in 2012 for $500 million. Revenues at Double Down, which has 1.4 million daily active users, declined 11.7 percent last year, according to Las Vegas brokerage firm Union Gaming.
“After several years of strong, organic growth and increasingly attractive valuation levels, the time is right for us to maximize the value of this asset for our shareholders,’’ said Marco Sala, CEO of IGT.
The two companies also reached an agreement to allow DoubleU to offer IGT’s casino game library on the South Korean company’s social casino platforms in exchange for royalties to IGT.
Proceeds from the sale will be used for general corporate purposes, including debt reduction, IGT said in the statement. The transaction will cut net debt to EBITDA to 4 times from 4.5 times, according to Union Gaming.
“We are encouraged to see IGT divest a non-core business like Double Down, capitalize on the valuation, and deleverage the balance sheet,’’ Union Gaming said in a note Tuesday.
IGT is the second Las Vegas-based company to sell a social gaming unit to an Asian company in the past 12 months to help cut debt.
Caesars Entertainment Corp. agreed in July to sell its Playtika Ltd. for $4.4 billion to Chinese investors led by Shanghai Giant Network Technology Co.
Caesars sold Playtika, which has 6.5 million daily average users, for 13.5 times the unit’s EBITDA, a 30 percent premium compared to Double Down’s valuation.
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