NetEnt has entered into an agreement to purchase online casino software supplier Red Tiger for an initial £200m, with a potential additional cash consideration of £23m.
The all-cash transaction is to be finalised imminently, and falls in line with the casino content developer’s vision “to create the future of gaming”.
NetEnt is to pay approximately £197m for all Red Tiger shares, with the remaining sum potentially becoming payable in 2022 based upon an earn-out basis, subject to financial performance over the coming two years.
This corresponds to a multiple of approximately 12 times current year EBITDA, with NetEnt’s income for the third quarter of 2019 set to include approximately SEK 55m (£4.6m) of transaction and financing related costs.
Therese Hillman, group CEO of NetEnt, said of the acquisition: “I am very pleased to welcome Red Tiger into the NetEnt Group. The acquisition combines two of the leading and most innovative companies in the online gaming industry.
“We look forward to working with Red Tiger’s fantastic team to enhance our combined global reach, and to offer further value to operators and players. The transaction will provide significant revenue synergies across our markets worldwide.”
Established five years ago, Red Tiger, which boasts operations across Malta, Isle of Man and Bulgaria, is expected to reach EBITDA of £18m for this year.
Via the purchase NetEnt is striving to utilise the opportunity to capitalise on its scalable technology to support future growth.
Gavin Hamilton, CEO of Red Tiger, commented: “This is an exciting new stage of the Red Tiger story and we are delighted to become part of the NetEnt group. Accessing NetEnt’s unparalleled distribution network and geographic footprint will unlock new opportunities for Red Tiger, and will further accelerate our growth.
“At Red Tiger we’ll remain focused as always on driving further innovation, and we are looking forward to working with NetEnt on how to leverage our combined capabilities to create new products that wow our customers.”