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Churchill buys Big Fish gaming platform in $885 million deal

California Chrome with Victor Espinoza up stalks the pack in the going into the first turn during the 140th running of the Kentucky Derby at Churchill Downs May 3, 2014. Photo by David Coyle
California Chrome with Victor Espinoza up stalks the pack in the going into the first turn during the 140th running of the Kentucky Derby at Churchill Downs May 3, 2014. Photo by David Coyle Herald-Leader

Churchill Downs announced late Wednesday that it has acquired Big Fish Games and Big Fish Casino, an online social casino game.

The announcement said that Churchill is buying Big Fish for a deal valued at as much as $885 million, including a potential bonus payment to the founder and current CEO of Big Fish, Paul Thelen, of $50 million based on 2016 bookings.

The purchase price will be paid in cash, except for about $15 million paid in Churchill Downs' common stock to Thelen, according to a news release announcing the deal.

A conference call is scheduled for Thursday morning to discuss the deal with stock analysts.

The merger, which has been approved by the boards of directors of both companies, must receive regulatory approval, the companies said. The transaction is expected to close by the end of the year.

The deal should give Churchill Downs a major stake in online games and, potentially, gambling. The company recently shuttered its own effort to develop a gaming platform, Luckity, because it cost too much money to attract customers. Instead, Churchill is buying a game platform that features free games including Mystery Case Files and Hidden Expedition, and casino games.

"The acquisition of Big Fish and our entry into the rapidly growing mobile and online games industry gives us new products, new customers, new geographies and new sizeable growth opportunities," Churchill Downs CEO Bill Carstanjen said. "While many will view this transaction as a logical extension to what we currently do with Twinspires.com, what is most important to us are the strong team and the processes and capabilities that have been built by Big Fish in Seattle, Oakland and Luxembourg."

Thelen, Big Fish's founder, said, "We are extremely proud of the company we have built over the last 12 years. Churchill Downs is a company with a commitment to interactive entertainment and a track record of growth and performance. We believe Big Fish is now positioned to become an even greater force in the casual, mid-core and social casino mobile and online games industry. Churchill Downs is a great cultural fit for us."

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