Penn National Gaming, Inc. announced today that it acquired Rocket Games, Inc., a number one developer of social casino games, for about $60 million cash, subject to working capital and other adjustments, including potential earn-out payments for certain members of the Rocket Games management team. The earn-out payments over the following two years could be in response to a multiple of 6.25 times Rocket’s then-trailing twelve month earnings before interest, taxes, depreciation and amortization (“EBITDA”), subject to a cap of $110 million for the earn-out. The transaction is anticipated to be immediately accretive to Penn National’s operating results. 

Founded in 2013 by game developers Bill Gelpi (chief executive officer) and Steven Jian (chief technology officer), the management team was rounded out in 2014 by fellow Zynga veterans Niko Vuori (chief operating officer) and Justin Cooper (chief content officer). Today Rocket has a team of over 30 employees based in its San Francisco office. Rocket was recognized by industry experts Eilers & Krejcik Gaming because the fastest growing social casino company in 2015, growing by over 500% and reaching a top-15 position globally within the growing social casino gaming segment, partially in response to its leadership position within the rapidly growing classic 3-reel mechanical slots genre (3RM). Rocket generated approximately $5.6 million of operating EBITDA through the six month period ended June 30, 2016. 

Rocket’s library of over 50 social casino games feature hits equivalent to Viva Slots Las Vegas, Downtown Deluxe Slots, Triple Double Slots and Vegas Jackpot Casino, at the side of popular licensed titles corresponding to Popeye Classic Slots. Rocket’s social slot games can be found at the iTunes App Store, the Google Play store, on Amazon and via Facebook. Following the transaction Rocket will stay headquartered in San Francisco and its existing management team will continue to run day-to-day operations. 

Penn National Gaming President and CEO, Timothy J. Wilmott, commented, “Penn National’s accretive acquisition of Rocket highlights our ongoing strategic initiative to obtain emerging growth platforms that complement, and make allowance us to leverage, our core regional gaming operations and database of over three million active customers. 

“Since the separation of our gaming assets from our real estate assets in 2013 we have now been highly excited about a broad range of growth and diversification initiatives. Launched last year, Penn National’s Hollywoodcasino.com and Hollywoodslots.com social casino offerings was rather well received by players, are profitable and function effective customer acquisition tools for our operations. In line with our internal analysis, an important segment of Penn National’s database customers actively take part in social and online gaming, and we believe there are meaningful operating and revenue synergies between Penn National’s operations, our Hollywoodcasino.com and Hollywoodslots.com social casino offerings and Rocket’s operations with the intention to drive near- and long-term growth for our shareholders.” 

Chris Sheffield, senior vice chairman and managing director of iGaming at Penn National Gaming, added, “We are excited to obtain a best-in-class social casino game developer in a transaction that greatly expands our in-house capabilities and additional diversifies our portfolio of leading gaming entertainment assets. Rocket’s growth and industry and consumer acclaim over the last THREE HUNDRED AND SIXTY FIVE DAYS is impressive given their loss of funding from outside investors or access to the resources and experience of a longtime casino operator. 

“Rocket’s flagship game ‘Viva Slots Vegas’ is mobile casino gaming’s ‘classic slots’ leader, having attracted a growing audience of over 200,000 average daily active players, and we believe Rocket provides Penn National with an efficient platform to further cross promote our already successful social and online operations in addition to our existing portfolio of regional gaming properties. 

“Our internal research confirms that social and online gaming is extremely complementary to our core regional gaming operations and a key component to our gaming entertainment offerings whose importance grows on a daily basis. This acquisition will provide a highly accomplished team, content and platform to rapidly grow our footprint on this space and interact with our customers, building loyalty and retention while serving as an important channel for brand new customer acquisition.” 

Bill Gelpi, chief executive officer of Rocket, added, “The entire Rocket team is delighted to enroll in the Penn National family and leverage their expertise and nationwide reach to take our game development capabilities and corporate growth to the following level. Social and online gaming is an especially attractive segment of mobile and online gaming, and tying our innovative gaming expertise to a conventional casino operator with a professional database of shoppers will create unmatched opportunities for both Rocket Games and Penn National.” 

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