Newgioco Group, Inc. (''Newgioco'' or the ''Company'') (NWGI), announced today that the Company has entered into an agreement to acquire Virtual Generation Ltd. (''VG''), a leading developer of virtual gaming software, together with Naos Holding Limited a private holding company (''Naos''). VG was founded in 2014 and has grown from processing 67,000 bet tickets in its first year to over 20 million bet tickets in 2018 for its online and land-based B2B customers in 12 countries in Europe, Latin America and Africa.
''This strategic, bolt-on acquisition is a key step in our efforts to expand our addressable market, diversify our revenues and should enable us to accelerate our differentiation as one of the most powerful gaming platforms in the industry with superior risk management capabilities. We are very excited to add VG's virtual gaming software to Newgioco's portfolio of market-leading gaming technology platforms, putting us in a stronger position to provide our fully integrated SaaS-based services to large, high-growth gaming markets around the world,'' stated Michele (Mike) Ciavarella, Chief Executive Officer of Newgioco. '' We are also delighted to add the highly talented management and sales team from VG to Newgioco and are now positioned to cross sell VG's software and the ELYS platform as a complete package to sports book operators and casinos in the 12 countries where VG currently operates, as well as new markets including the U.S. sports betting market. VG's powerful platform, which has been running on Newgioco's ELYS platform, allows for extensive customization for country specific sports generation, providing a target rich environment for future applications in Latin American and African markets, as well as unique U.S. Tribal Games tailored for the U.S. Tribal gaming market.''
Newgioco has agreed to pay approximately $4.5 million in a combination of cash and stock to acquire VG, with an additional earn-out payment of approximately $560,000 in stock contingent on a 5% increase in the number of bets made through the VG platform in 2019 compared to 2018. Ciavarella added, ''VG is a profitable company realizing approximately 15% in net margins and we expect the acquisition to be immediately accretive to Newgioco in 2019. We also expect to realize cost savings by using VG's virtual gaming products in Newgioco's land-based and online gaming operations in Italy following certification by Italian gaming regulators.'' The sellers of VG include Mr. Luca Pasquini, the Company's Chief Technology Officer and a member of the Company's board of directors, and Mr. Gabriele Peroni, the Company's Vice President of Business Development, each of whom owns 800 ordinary shares of Naos (20% of the issued and outstanding shares of Naos).
VG's software is certified by Gaming Laboratories International (GLI) and includes a growing portfolio of products including horse racing and greyhound racing, league play football (soccer), keno and American roulette. VG currently operates in Italy, Albania, Turkey, Mexico, Peru, Paraguay, Nicaragua, Honduras, Colombia, Dominican Republic, Nigeria and Uganda. Simultaneously, Newgioco plans to introduce the VG product line into the regulated Italian market, utilizing Newgioco's existing Italian ADM platform certification.