The online casino technology provider sector is joining the gambling industry’s consolidation fad as live dealer specialists Evolution Gaming unveiled a takeover bid for random number generator )RNG) online slots gurus NetEnt.
On Wednesday 24, the Stockholm-listed Evolution Gaming announced an SEK19.6b (US$2.11b) offer to acquire compatriot NetEnt in a bid to create what the former called “the world leader in the online gaming industry.” The formal offer document will be published in August with a deadline for acceptance of October 26 and possible completion of the deal by November 2.
The offer values NetEnt’s shares at slightly below SEK80, a 43% premium over the firm’s Tuesday closing price. NetEnt’s board has unanimously suggested that shareholders accept the offer, which Evolution has said will not go up.
NetEnt’s biggest long-term family shareholders, who represents 68.2% off votes and 29.5% of the firm’s capital, have either signed irrevocable undertakings to accept the offer or made sentiments indicating their plan to sign such undertakings.
Evolution Chief Executive Jens von Bahr said the merging of his firm’s live casino offering with NetEnt’s online slots expertise would create a a world class portfolio of online games that will enable us to serve a growing customer base.”
The combination would have a strong position in the growing Unites States market due to NetEnt’s existing B2B agreements and Evolution’s growing stable of North American live dealer studios.
Evolution claimed the acquisition would not result in major reductions in either firm’s employees, although the brands do expect annual ‘synergies’ of €30m, which will probably take more than simply sharing company letterhead.
The two brands generated a combined revenue of about €536m in 2019, despite each struggling to adapt to Sweden’s fresh regulated online gaming market. The pair reported strong growth in the US market during Q1 2020, while Evolution’s Asian-facing business almost tripled in the first quarter.
Evolution’s share closed out Wednesday’s trading down almost 6% whereas NetEnt recorded share spikes of one-third.