Big Fish: Pokies giant Aristocrat bets on social game

Australian poker-machine giant Aristocrat has sealed a $1.3 billion deal to acquire a hugely popular social gaming company based in the US in a move to capitalise on the worldwide boom in mobile games.

Aristocrat’s acquisition of Big Fish Games, revealed on Thursday, doubles the size of Aristocrat’s fast-growing digital arm and makes it the second-largest social casino gaming business in the world by revenue.

Aristocrat chief executive Trevor Croker said the acquisition was a major expansion of the company’s social gaming footprint.

Headquartered in Seattle, Big Fish makes popular social games for mobile devices and desktop including Big Fish, Gummy Drop!, and Fairway Solitaire.

“The strategic and financial benefits from the acquisition are highly compelling,” Mr Croker said.

“The acquisition of Big Fish will immediately provide scale across our entire digital platform.”

On Thursday, the ASX-listed Aristocrat also unveiled its full-year results, reporting its revenue had grown 15 per cent to $2.4 billion, driving a massive 41 per cent jump in net profit to $495 million.

But despite the substantial rise, the company’s share price plunged throughout the day, falling nearly 7 per cent, or $1.61, to close at $21.99.

Investors raised concerns on Thursday about Big Fish’s weaker year-on-year financial performance.

In its latest earnings report, its parent company, Churchill Downs, said Big Fish revenue had declined $US4.4 million ($A5.8 million) in the third quarter compared to the previous year. Its adjusted earnings fell by $US10.2 million.

But in a statement on Thursday, Churchill Downs said Big FIsh had a “bright future that will be best realised by being part of Aristocrat’s strategy and vision for their online mobile gaming portfolio”.

Aristocrat’s core business is manufacturing poker machines and other electronic gaming machine technology, but the company has notably upped its bet on the online social gaming market this year.

In August, it announced the purchase of Israeli gaming company Plarium, which makes the popular Vikings: War of Clans game, for $635 million.

Mr Croker said the Big Fish acquisition made Aristocrat the second-largest social casino gaming publisher globally, with revenues increasing from $383 million to $641 million for the year ended September 30.

Big Fish has about 700 full-time employees and five in-house development studios in Seattle and Oakland.

Aristocrat investors were told Big Fish’s key game development talent and leadership team had entered into non-compete and retention arrangements with Aristocrat.

Aristocrat will pay shareholders an unfranked final dividend of $20?? per share.

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