Birmingham-based prize and vending equipment company Funhouse Leisure has been acquired by rival Playnation

Funhouse Leisure was founded 18 years ago and operates more than 1,600 family-focused machines in the hospitality and leisure sector for clients such as Whitbread, Spirit Pub Company, Orchid, Greene King and Odeon.

This is the first acquisition for Cheshire-based Playnation following a management buyout last from previous incarnation Inspired Gaming, backed by private equity firm Palatine.

The company provides its machines to holiday parks, motorway services, bowling centres and airports.

The deal will allow Erdington-based Funhouse Leisure, which has 15 staff and turnover of £3 million, to capitalise on Playnation's scale, size and UK support network while enabling it to continue to operate as a single business.

Chief executive Nasser Ghanchi said: "We've known the Playnation management team for a long time and believe Funhouse will  flourish under its new ownership.

"Playnation's national service support operation and its central commercial functions can only build and improve on the great service we currently provide to our customers in the hospitality and leisure sector. We are looking forward to an exciting year ahead."

Playnation's chief executive Adam Hodges added: "2014 has been a great year for us and we have worked hard to find the right company for our first acquisition.

"Funhouse has a great team and is a well-established operator with a customer base that is complimentary to our own.

"We are confident it will expand our reach in the family focused leisure sector."

Gateley provided legal advice while financial due diligence was conducted by Dow Schofield Watts and operations due diligence came from Berkeley Partnership.