Live gaming giant Evolution Gaming looks poised to acquire another member of the igaming establishment with news this morning that it has made a bid to buy NetEnt, an offer the NetEnt board is recommending to shareholders.
The proposed transaction sees Evolution offer 0.1306 shares for each share in NetEnt, valuing each at SEK 79.93 and all shares in the firm to approximately SEK 19.6bn.
The offered consideration per share represents a premium of 43 per cent compared to the closing price of the NetEnt share of series B on Nasdaq Stockholm on June 23, 2020.
Evolution has stated that it will not increase the offer, with an acceptance period to commence on August 17, 2020 and expire on or around October 26, 2020.
Completion is subject to customary conditions, including regulatory clearances being obtained and the offer being accepted to such extent that Evolution Gaming becomes the owner of shares representing more than 90 per cent of the total number of outstanding shares.
In the event that Evolution, whether in connection with the offer or otherwise, obtains more than 90 per cent of the shares in NetEnt, it intends to initiate a compulsory buy‑out procedure with respect to the remaining shares in accordance with the Swedish Companies Act.
The combination is expected to result in annual cost savings of approximately €30m, compared to the combined cost basis of both parties as of the first quarter the year. This includes the cost savings of approximately SEK 150m which NetEnt already has disclosed. These are expected to be fully realised during 2021.
The primary value, however, is expected to be realised through the significant revenue synergies generated through the combination. The transaction is expected to have a positive effect on Evolution’s earnings per share in 2021.
Mathias Hedlund, chairman of NetEnt, explained: “Recently, NetEnt has vastly improved its tech and product development capabilities and thereby its growth prospects and at the same time reaching a strong position within the US states that have opened up for online casino.
“With this deal, there are unique possibilities to shape a leading global B2B provider of online casino, taking advantage of the market development with continued digitalisation and strong growth, especially in North America.
“Evolution’s position within live casino combined with NetEnt’s position within online slots will create a company well positioned to take significant market shares. Through this transaction, a new chapter in the development of more entertaining online casino begins, in the best interest of players, operators, employees and shareholders.”
Lauding a “landmark” deal in accelerating Evolution’s long-term ambition of “ becoming the world leader in the online gaming industry,” the combined product portfolio will include live casino and online slots games, and generate revenue upsides through cross-selling and improved distribution via both companies’ customer bases, with closer customer partnerships and additional geographical spread of the companies’ products said to be achievable as result.
In its evaluation of the offer, the NetEnt board of directors asserts that it has taken a number of factors into account which it deems relevant, including, but not limited to, the company’s present strategic and financial position, prevailing market conditions and operational opportunities and challenges, expected future development and associated opportunities and risks.
The board states that it views a combination of NetEnt and Evolution Gaming as “positive and believes it to be strategically sound, and the share consideration allows the company’s shareholders to take part of the combined accelerated growth story and combination benefits”
Jens von Bahr, chairman of Evolution, explained: “This strategic deal marks a significant step towards Evolution’s long-term vision of becoming the global market leader in the online casino industry.
“The combination of Evolution’s strong offering in live casino with NetEnt’s leading position in online slots will result in a world class portfolio of online games that will enable us to serve a growing customer base.
“Furthermore, NetEnt’s established US positioning combined with Evolution’s existing US studios and first-to-regulated-market strategy will put us in a favourable position to capitalise on the on-going regulation in North America.”