Donaco agrees to buy gaming business in Cambodia

Australia-listed Donaco International said it agreed to buy a “significant” gaming and hospitality business in Cambodia.
The company said it has signed an exclusive term sheet and is currently carrying out due diligence on the business, which it didn’t name. The term sheet includes an exclusive negotiation period extending into early 2015.
“Cambodia has a well-established gaming industry, which is supported by the Government as a driver of tourism, since local citizens are not permitted to enter casinos. The business proposed to be acquired is well-established and profitable, with good growth prospects,” it said in a statement.
Donaco opened the luxury Aristo International casino resort in Lao Cai, in neighbouring Vietnam in May, after a significant upgrade to an existing property.
The company has said that it’s seeking further opportunities for expansion in boutique resorts around Asia and recently told the Australian Stock Exchange in a filing that it has a significant pipeline of potential deals.
Donaco says the proposed Cambodia acquisition serves a different market from its China-facing business in Vietnam.
“The proposed acquisition thus provides diversification as well as scale benefits,” it said.
The acquisition will take place at a multiple of six times earnings before interest, tax, depreciation, and amortisation for the financial year of the business ending on 31 December 2014. It will be funded from existing cash reserves and new debt facilities, together with an equity component for the seller, it said.
Donaco expects the new acquisition to provide a strong boost to earnings per share.