Posted on: Could 15, 2023, 12:47h.
Final up to date on: Could 15, 2023, 05:44h.
Aristocrat Leisure (ASX: ALL), one of many largest slot machine producers, is growing its iGaming footprint with a $1.2 billion all-cash acquisition of NeoGames (NASDAQ: NGMS).
The deal introduced late Sunday values NeoGames at $29.50 a share, or a 104% premium to the inventory’s common closing worth for the three months ending Could 12. NeoGames operates web lottery video games within the US, Canada, and different markets worldwide.
Completion of the transaction is predicted to happen inside 12 months, and is contingent upon customary closing circumstances, together with receipt of regulatory approvals and the approval of NeoGames’ shareholders,” in accordance with an announcement. “NeoGames shareholders who maintain a complete of roughly 20,382,242 shares, representing roughly 61% of NeoGames’ excellent shares, have executed a assist settlement with Aristocrat pursuant to which they’ve irrevocably agreed to vote in favor of the transaction.”
NeoGames’ board of administrators voted unanimously in favor of the takeover. Upon completion of the deal, the web lottery agency will turn into a completely owned subsidiary of Aristocrat.
Win-Win for Aristocrat, NeoGames Buyers
With the takeover worth representing a 130% premium to the place NeoGames shares closed final Friday, current traders within the inventory are benefiting. The inventory slid 10.77% on Could 12 however is greater by 5.33% year-to-date.
“Whereas we stay believers within the long-term, high-quality iLottery alternative, the probably gradual rollout throughout the US, coupled with a troublesome macro atmosphere for illiquid shares, offered a difficult outlook for near-to-medium-term worth discovery,” wrote Stifel analyst Jeffrey Stantial in a Sunday notice.
Stifel acted as an advisor to NeoGames. Within the US, Michigan is the goal’s high market, and NeoGames can be operational in New Hampshire, North Carolina, and Virginia and is pursuing iLottery contracts in Alaska, Connecticut, Maryland, Massachusetts, Missouri, Ohio, and Oregon.
As for Aristocrat, the Australian firm lands an avenue for growing its iGaming and on-line lottery footprint following the 2022 collapse of its tried acquisition of Playtech (LSE: PTEC). Aristocrat might also have the ability to higher leverage Aspire World, which NeoGames acquired early final yr. That Swedish firm is a business-to-business expertise options supplier to on-line sports activities betting and on line casino operators. I
ts companions embody well-known operators, akin to 888 Holdings, Betfair, Entain, Flutter, and William Hill.
Aristocrat/NeoGames Deal Spotlights iLottery
Whereas iLottery has been gradual to take off relative to iGaming and on-line sports activities betting, it nonetheless provides a compelling development trajectory — one highlighted by Aristocrat’s buy of NeoGames. The acquisition is also a boon for different firms with web lottery publicity, together with Worldwide Sport Know-how (NYSE: IGT).
We do see a vote of confidence in Aristocrat opting to diversify outdoors of the core on line casino enterprise into iLottery. Therefore, we argue the deal reads favorably for Purchase-rated IGT, although acknowledging that iLottery stays a small piece of IGT’s income base,” added Stantial.
The NeoGames buy additionally supplies a runway for Aristocrat to higher compete amongst US-centric rivals, together with IGT and Gentle & Marvel (NASDAQ: LNW).