Aldgate Capital has agreed to acquire amusement arcade operator HJM Caterers and E&J Hall Investments for £25m as a springboard for its plans to build a diversified low-stake gaming group.
The purchase, part of Aldgate’s strategy of acquiring in the low stake-high volume gaming market, constitutes a reverse takeover under AIM rules. As a result Aldgate will be renamed Praesepe Plc.
Aldgate will gain 31 adult gaming centres across the West Midlands, Essex and South Wales. The deal counts as a reverse acquisition under AIM rules.
The deal is made up of £22m in cash and £3m in shares. A placing of 76m new shares at 22p per share will raise £16.7m (net).
The acquisition adds 31 adult gaming centres in the UK to Aldgate’s books. Despite the smoking ban and Gambling Act causing the targets’ revenues to fall, Aldgate Capital said it expects strong cash flow and predicts full year revenues of £11 million and EBITDA of £2.9 million
HJM Caterers and E&J Hall Investments saw revenues fall to their lowest ever level in September 2007 due to the impact of the smoking ban and gambling machine legislation, Aldgate said. However, it added that revenues have since improved with operations having adapted to both regulatory changes.
In the year to 31 March 2008 the acquired company made £1.5m profit before tax, down from £4.2m the year before, on revenues that slid from £13.3m to £11m.
