Welcome to the Evolution Gaming Group Press Conference April 2021. Throughout the call, all participants will be in listen only mode, so there's no need Today, I am pleased to present CEO, Martin Carlson and CFO, Jacob Kaplan. Please begin your meeting.
Thank you, operator. Good afternoon, everyone. My name is Martin Karlsson, and I'm CEO of Evolution. The structure of this call will be that I start presenting today's announcement. We will then move to some questions to speak to that we received during today, and I will answer those.
Those questions will be read of IR from Evolution for Linton. To. All materials will also be available on our website after this call, so you can look at it there. We will keep this call relatively brief, and I will not comment on anything to be besides today's announcement. We are presenting our interim report on our Q1 2021 in a couple of weeks.
It's on 27th April, so we will speak soon again. At that time, I will also have our usual open Q and A session. I'm very happy to announce that today we have entered into an agreement to acquire Big Time Gaming. Big Time Gaming is one of the truly innovative companies in the online casino space and we have followed their development for some time. We're very excited to join forces, continue our journey to create the global market leader in online casino games.
Big time gaming brings a very strong catalog of great games that players love. Titles like Bonanza, Extra Chile, Monopoly Megaways to have an audience worldwide. In addition, Big Time Gaming are a creator of Megaways game mechanic, which is featured in many of their own games, but also license to over 200 games from many different providers, need. Including also NetCent and the Tiger brands. We won in late last year, closed a deal to and by that, the slot games to our live casino offering, it was a significant step forward towards the ambition to become the world leading provider of online casino games.
The acquisition of Big Time Gaming is as well an important step for us on that journey. With Big Time Gaming on board, we will increase the speed of that development towards the number one in online casinos. Pingtan Gaming's focus on innovation and developing new player experiences for players is a perfect fit with our focus as evolution. I'm very excited about the future development of the BTG brand, but also what we can do together. This is a short summary of the transaction.
Evolution acquires Big Time Gaming for a total consideration up to a maximum of €250,000,000 payable in cash and Evolution shares. Upfront consideration is €220,000,000 be out of €80,000,000 cash and the remainder in newly issued Evolution shares. In addition, an earnout will be paid in 2 tranches, 2023 2024. Maximum earnouts is €230,000,000 giving a total consideration of €450,000,000 The owner consideration will be payable in 70% cash and 30% newly issued Evolution shares. To.
BTG revenue for calendar year 2020 is over €30,000,000 with an EBITDA of €29,000,000 and we expect the deal to be accretive to EPS already 2021. The transaction is conditional upon receipt of regulatory to. Approval and completion is expected during Q2. But naturally, we put efforts to an as early closure as possible. This is the main point of our message today.
To complement this message, we have prepared some additional questions, which we have We will now answer. We'll not open up for a general Q and A today. But as I mentioned, we'll report on the 27th April, so we can, to of course come back to big time gaming at this time. Now next slide for some additional questions. Hi, this is Karl Linton, and I'm
the Head of IR at Evolution. We have received a few questions during the day about the acquisition of big time gaming. And I would choose a few of them to ask Martin. So Martin, we start out with the strategic rationale behind
acquisition. As I mentioned already, our long term ambition is to become the world leading provider on online casino. And with BTG, we have the most innovative slot creator of the past 5 years to our team. We're further strengthening our position as a world leading provider in both live slots, game shows and the mix between slots and live. We need to push boundaries and create the best games with the highest player entertainment value for the future.
To inspire our current as well as 2 key players and BTG enables us to create new fantastic games. Acquisition of BTG is financially attractive. But most importantly, we have a fantastic team to the Evolution family. We also had very strong IP with top class hypers, as I mentioned, Bonanza and Extra Chile and Monopoly Megaways. But in addition to that, We also own add the ownership of Megaways game mechanic, which is the most desired game mechanic among players Another slot provides license to over 200 games throughout the world.
Thank you. And which geographic market are BTG particularly to join in.
There's a very good distribution in both Europe and U. S. And we will work to continue to developing those distribution channels as well as expand beyond those relationships that are already present. It will over time increase the reach of BTG products through evolution, which is becoming the largest online casino network in the world, to. And we'll continuously work with that.
With BTG on board now, how much would that amount for of total revenue for Evolutant?
BTG had revenues of €33,000,000 in 2020. I mentioned earlier about 2030. Need. NetHunt is about €200,000,000 revenue in 2020. So it has about 16% of our slots business, give or take.
In comparison to Evolution, which had just over €540,000,000 2020.
And how will the acquisition affect the margin of evolution? Are there any synergies?
BTG, as you understand, have a high profitability. EBITDA is €29,000,000 in 2020. So margin is above to 85% or above 85%. Adding BTG would therefore not wait negatively on the Evolution Group margin. They're not direct cost synergies, maybe even some negative synergies as we need to invest to align B2D with its operations in a larger group.
Do you see any revenue synergies?
BTG has a good distribution already, worth mentioning. Over time. We will, of course, work to support their continued growth, but we have not announced any specific revenue synergies. It is going healthily on its own notes and this is also reflected in the ONO structure for the deal.
Can you explain the payment structure? Why on out?
Yes. We paid €220,000,000 today, €80,000,000 in cash, need. Remaining a part in shares. There is an earn out split into 2023 2024, as I mentioned before. And the total additional earnout is JPY 230,000,000 giving a total consolidation of JPY 450,000,000 Maximum.
The doughnut portion in itself is between 70% cash and 30% shares. Or not, depending on BTG performance, of course, during the coming years. While paying a maximum or not, the deal multiples is lower than on the upfront payment alone. So That, of course, that's for us that they reach maximum amount. BTG is very Interesting.
It's an event that has been faced, but they have proven themselves to create groundbreaking and innovative games. I think that is the most important. We look to support them in better scaling and to Scaling that up and introducing the gains to wider audience.
What is the BTG's EBITDA for 2020? And what does the EBITDA need to be for 2022, 2023 and 2023, 2024 in order for evolution to pay out the full earn out payment of €230,000,000
I will not go into details of the earn out or give any top line forecast, but BTG has a very good growth today In the 30%, 40% range, and we expect to continue their strong growth and high profitability. And how will the deal affect EPS? How much? The deal would be accretive to EPS already 2021. In the context of the whole group, it's not necessarily a smaller effect,
What advantage does the new acquisition add to the NetCent that NetCent doesn't have?
Like Netizen and Red Tiger, BTG has a focus on high quality and innovative playing experiences. The megawatt game mechanic is, of course, very interesting to own as well as some other IP that can be used by all brands in the world.
And to which date will BTG be fully consolidated with evolution?
We have said during Q2, but we'll naturally work to close the server as possible.
Will you continue to sell Megaways to other competitors?
It's a song IP and it's caught a lot of traction by players. We're already using several NetHunt games and we'll continue to license it also to others. Will you continue to acquire slot companies? I have this question a lot of course and organic growth is always number 1 for us. We need to be better every single day, to know each part of the company organically at a high pace.
Creating the best games is our focus in all parts of the business. Having that said, we look carefully for the right pieces that we need to move closer to our ambition to become the number 1 in online casino.
And last question now, do you need to clear the deal with any competition authorities?
The short answer is no. This is a much smaller transaction than the national transaction. So competition issues are not expected. And that was all the questions to speak.
I was going to add Martin. Thank you all of you who have called in. And now over to Martin for his last words.
Okay. Thank you very much for listening. I hope this was giving some additional information to you all. And I look forward to come back to you call on the 27th April. Thank you very much and goodbye.