Nuneaton-based amusement arcade brand Shipley Amusements has been snapped up by Aldgate Capital (AGT) in a £25 million deal.
HJM Caterers and E&J Hall Investments, which together trade under the Shipley Amusements brand, have 31 amusement arcades throughout the Midlands and Wales.
Aim-listed Aldgate, run by well-known industry figure Nick Harding, said the deal was a perfect springboard for its plans to build a diversified gaming group in the UK and Europe.
Shipley Amusements founder and former managing director Jon Shipley said: “Whilst it was a difficult decision for me to sell the businesses I have built up over the past 30 years, I know Nick Harding and Aldgate very well and I am confident that they will continue to be successful.”
HJM Caterers and E&J Hall Investments had a revenue of £11 million in the last financial year and EBITDA of £2.9 million, with a strong cash flow despite the recent negative impact of the smoking ban and changes to the gaming laws.
Aldgate said the business would be rebranded under the name “Cashino” and would managed by Jonathon Hughes, an experienced UK gaming machine operator.
The deal qualifies as a reverse acquisition under AIM rules and as part of the readmission process, Aldgate will change its name to Praesepe .
Aldgate chairman David Williams said: “This first acquisition is the perfect springboard for Aldgate’s strategy to create a diversified, international Low Stake High Volume (LSHV) gaming group.
“We are acquiring a well-run business with a strong market position that has been consistently cash generative throughout the economic cycle.
“The LSHV gaming industry remains highly fragmented and presents a number of further acquisition opportunities. We believe that scale and diversification in the UK and Europe will enable us to take advantage of the evolving regulatory and operating trends in the LSHV gaming industry.”
“We have a first rate management team in place who have significant experience in building gaming businesses and a proven track record of delivering shareholder value.”
Aldgate aims to create a business with EBITDA of about £50 million within 18 months through further acquisitions.
KPMG Corporate Finance in Birmingham advised Jon Shipley on the sale, while legal advice was provided by Bradley Quin of Hammonds LLP with support from the firm’s specialist teams in Birmingham.
Neil Meredith, who led the KPMG team, believes that this could be the first of a number of deals within the sector as market conditions begin to change.
“It marks a return to confidence in a market which is now showing signs of a sustained recovery,” he said.