The online casino technology supplier segment is joining the gambling industry’s consolidation craze as live dealer specialists Evolution Gaming launched a takeover bid for random number generator (RNG) online slots stars NetEnt.
On Wednesday, the Stockholm-listed Evolution announced an SEK19.6b (US$2.11b) offer to acquire fellow Swedes NetEnt in a bid to create what Evolution called “the world leader in the online gaming industry.” The official offer document will be published in mid-August with a deadline for acceptance of October 26 and possible completion of the acquisition by November 2.
The offer values NetEnt’s shares at just under SEK80, a 43% premium over the company’s Tuesday closing price. NetEnt’s board has unanimously recommended that shareholders accept the offer, which Evolution has warned it will not increase.
NetEnt’s largest long-term family shareholders, who represents 68.2% of votes and 29.5% of the company’s capital, have either signed irrevocable undertakings to accept the offer or made statements indicating their intention to sign such undertakings.
Evolution CEO Jens von Bahr said the combination of his firm’s live casino offering with NetEnt’s online slots experience would create “a world class portfolio of online games that will enable us to serve a growing customer base.” The combo would have a strong position in the growing US market, thanks to NetEnt’s existing B2B deals and Evolution’s growing stable of North American live dealer studios.
Evolution claimed that the combination wouldn’t result in significant reductions in either company’s staff, although the companies do expect annual ‘synergies’ of €30m, which will likely take more than just sharing company letterhead.
The two companies generated combined revenue of around €536m last year, despite each struggling to adapt to Sweden’s new regulated online gambling market. Both companies reported strong growth in the US market during the first quarter of 2020, while Evolution’s Asian-facing business nearly tripled in Q1.
Evolution’s shares closed out Wednesday’s trading down nearly 6% while NetEnt saw its shares spike by one-third on the news.