Neurosoft in late stage negotiations to acquire Fasbet Group; on the lookout for targets in Greece and Italy; open to advisory suggestions, CEO says (mergermarket)
Neurosoft, a Greek provider of integrated software systems listed on the Italian AIM stock exchange, is in late stage negotiations to acquire Glasgow-based Fasbet Group, chief executive officer Nikos Vasilonikolidakis said.
A binding agreement has already been signed and a deal is likely to be completed between the end of October and the beginning of November. Deloitte is currently advising on the transaction whereas Morrison & Foerster (MoFo), a law firm in Washington DC, is acting as the legal advisor, he added.
According to Vasilonikolidakis, the official deadline to finalize Fastbet's takeover is November 15th. However, the management is keen to proceed with the acquisition in the coming weeks. "Due diligence is almost concluded and we are close to a deal," the CEO said, adding that the agreed sale price is EUR 2.45m.
Fasbet specializes in financial and sports betting exchange technologies. The company, which employs 12 staff, provides the newest B2B betting exchange, licenced and operating from the Isle of Man, Vasilonikolidakis said. Fasbet Group consists of Wray and Entwisle ltd, Fasbet UK ltd and Fasbet IOM ltd.
Following the deal, Neurosoft expects around 50% growth in 2010 with revenues hitting EUR 10m at the end of next year. As for 2009, the CEO predicted a turnover of around EUR 6m.
Vasilonikolidakis is currently monitoring the Greek and Italian market for bolt-on opportunities in horizontal products. A string of M&A deals is likely to occur between the end of 2009 and the beginning of 2010.
With no financial advisors being appointed, Neurosoft is actively seeking targets in Greece and Italy using own resources. Vasilonikolidakis is considering several opportunities in workflow systems to be applied across its existing product portfolio.
An attractive takeover candidate was recently identified in Greece where early stage discussions are currently taking place, he said. If the company proves to be valuable, a takeover will be executed by year end. "In Greece acquisitions will be fast. We won't take more than two months to carry out M&A deals," he said. "We are seriously considering one opportunity right now but we keep our eyes open for other options," he added.
Ideal targets should operate in the business intelligence space with a well-established client portfolio. Vasilonikolidakis ruled out that acquisitions could be cash burning and he expressed little interest in companies providing vertical integration. "We will mainly consider opportunistic targets providing horizontal synergies," he said.
The estimated deal value is between EUR 1-2m for each single buy.
Core-factoring solutions were described as the main M&A driver in Italy. By the end of Q1 2010, Neurosoft wants to enhance its client base in this specific market segment with a combination of possible M&A and organic growth.
"The core-factoring market in Italy is worth around EUR 140bn. It is the second largest core-factoring market worldwide," the CEO said. Neurosoft has already initiated talks with local players in Italy since last summer, he noted
"Italy is waiting for us. It's quite likely that tackle the market through M&A deals," he claimed. At the same time, Vasilonikolidakis ruled out engaging in transformational buys, particularly with listed targets. "We won't consider public companies and we won't pursue acquisitions in the risk management arena as we are partly controlled by Lottomatica which would be reluctant in backing such a plan," he said.
Neurosoft generates around 60-70% of its revenues from risk management operations with Greece being its largest market. It is also increasing its sales volume in business intelligence where it has a more global client portfolio with customers across Europe and South America.
Neurosoft is mainly competing with Greek listed Intralot and US listed GTech in the risk management arena while it sees a plethora of rival companies operating in several areas of business intelligence, Vasilonikolidakis noted.
Prior to its IPO in May 2009, Greek listed gaming firm OPAP acquired a 36% stake in the company.
Italian gambling group Lottomatica is also among Neurosoft's shareholders with a 5% stake.
Mediobanca acted as global coordinator and specialist during the company's recent IPO. Banca Akros was its nominated advisor (Nomad) whereas Norton Rose was appointed as legal advisor.
In March 2009, Neurosoft, through one of its subsidiaries, acquired the rights related to the use and commercial exploitation of Betonews, a website specializing in sports journalism and statistical analysis.
Neurosoft was recently admitted as a member of the World Lottery Association (WLA).
by Pamela Barbaglia in London
Source: 05/10/2009, Mergermarket.com
