Australian gaming leader Aristocrat Leisure Limited has finalized the sale of its mobile game development subsidiary, Plarium Global, to Modern Times Group (MTG) in a deal valued at up to $820 million. This transaction aligns with Aristocrat’s strategic objective to concentrate resources on core areas, such as real-money gaming and social casino offerings, reflecting a significant shift in the company’s long-term growth approach.

The acquisition agreement provides MTG, a Stockholm-listed company, with one of the most established names in the mid-core mobile gaming sector. MTG will pay a fixed $620 million upfront, with an additional $200 million contingent on Plarium achieving financial targets between 2025 and 2028. Aristocrat announced that the proceeds from this divestment would support its capital allocation framework, reinforcing its commitment to expanding in regulated gaming spaces.

Aristocrat CEO Trevor Croker highlighted the strategic importance of the sale, stating, “The sale of Plarium is a result of our review of our casual and mid-core gaming assets. As Aristocrat continues to expand its interactive business alongside Aristocrat Gaming and our leading mobile social casino offerings, we are increasingly focused on leveraging our strengths in regulated gaming and social slots.”

Plarium’s Role in Aristocrat’s Digital Transformation

Aristocrat initially acquired Plarium in October 2017, successfully integrating the mobile game developer into its Pixel United division. Over the seven-year ownership, Plarium became known for its popular RPG title RAID: Shadow Legends, which helped Aristocrat diversify its portfolio, particularly during the COVID-19 pandemic. Since the acquisition, Plarium has delivered a mid-teens internal rate of return (IRR), contributing $615 million in revenue, $166 million in segment profit, and an EBITA of $110 million, as reported in Aristocrat’s unaudited Q3 2024 results.

The sale comes as a result of a comprehensive review initiated by Aristocrat in May 2024, targeting areas where growth potential aligns more closely with the company’s regulated gaming focus. While Plarium’s expertise in mobile game content and live operations has greatly contributed to Aristocrat’s digital transformation, the company sees a streamlined portfolio as essential to strengthening its core operations and competitive edge in the real-money gaming sector.

According to MTG, the addition of Plarium’s assets will create “one of the strongest mid-core mobile gaming portfolios in the industry.” The acquisition is projected to elevate MTG’s annual revenue to over SEK 12 billion (USD $1.1 billion), with EBITDA anticipated to exceed SEK 3 billion, positioning the company for significant growth in the mid-core gaming space.

Strategic Shifts and Financial Implications for Aristocrat

The Plarium divestment signals a broader shift for Aristocrat as it looks to optimize its portfolio for long-term sustainability and profitability, according to Reuters via Yahoo Finance. Alongside the Plarium sale, Aristocrat has also been evaluating its Big Fish Games unit, excluding its social casino segment, as part of an ongoing review process. This review resulted in a goodwill impairment charge of approximately $110 million for Big Fish, with further updates expected when Aristocrat releases its 2024 annual results.

Despite a 1.1% dip in Aristocrat’s share price following the announcement, this strategic realignment has garnered support from industry analysts, with Citi commenting on the positive implications of the sale. “While Big Fish remains to be divested, the Plarium sale addresses a key bearish concern due to below-consensus fiscal 2025 digital forecasts,” Citi analysts remarked, suggesting the sale could mitigate concerns over Aristocrat’s digital performance projections.