Evolution Gaming who is widely known as one of the online gambling industry’s top-notch game developers announced a public offer on the 24th of June that sets them out to acquire the other developing giant NetEnt for a staggering price tag of 2.12 billion US dollars. In the details of the deal, Evolution offers 0.1306 of its shares per NetEnt share, therefore if the deal does go through as planned they will manage more than 90% of the company.
It must be noted, however, that the acceptance period of the offer can last up to 2 months and a half, hence why at the latest the deal might be a fact at the closing days of October. We cannot say that there is a reasonable amount of certainty that the deal will go through, but a good indicator that the deal might go through is the fact that NetEnt’s board of directors has recommended the deal to their shareholders. One of the driving reasons why Evolution Gaming executives wish to go through with this deal is the fact that it could save them approximately $30 million dollars.
As previously stated NetEnt shareholders have been asked to sell their shares in the company in exchange for 0.1306 Evolution Gaming shares. With this action each NetEnt share is valued at SEK 79.93, comprising of approximately SEK 19.6 billion (€1.8 billion) in total with both shares of series A and series B, based on pricing as of June 23, 2020. However, Evolution Gaming has stated that the terms under the Takeover Rules are not subject to discussion.
NetEnt’s closing price on last Tuesday promises a lucrative deal to NetEnt stakeholders, issuing a premium of 0.43 cents per share. Looking at the average price per share during the last 30 trading days the premium raises to 72%. It is speculated that every share will be taken over by Evolution Gaming Group AB, who will acquire 90% of the total shares. Shareholders have a deadline until 17th August to 26th October to accept the offer, with the estimated settlement date 2nd November.
Merging will bring a lot of benefits to both parties. While increasing the company’s footprint Evolution Gaming launched 12 new games at ICE London 2020, with the main focus on the move into the United States online gaming market. Both companies operate under licenses and registers in Malta by holding Critical Gaming Supply licenses. Evolution Gaming runs its office comprised of more than 600 employees. Last year an acquisition took place where NetEnt bought Red Tiger Gaming, thus enlarging both their game development capacity, market share, and most notably share value.
A big question still stands, if the deal will successfully be finished, as both of these companies are well aware that a lot of chips need to fall in place for the deal to be made a fact, however so far the signs that the acquisition will proceed are quite optimistic. Shareholders of the Swedish software giant NetEnt will most likely find this offer extremely tempting. After some robust eighteen months due mainly to changes in casino regulations (especially in Sweden and in the UK) the share price of NetEnt when the offer was announced stood at around SEK 55 (around £4.75 or $5.90) well below the companies high of SEK 80 in the summer of 2016, but still much better from the low of just over SEK 38 set following the market crash of March this year.
Some sings of reassurance have been seen from the NetEnt’s board of directors who voted unanimously in favor of recommending that their shareholders accept the offer submitted by Evolution Gaming which given that they are the major shareholders in the company comes as no surprise. The bid will become formal somewhere around the 14 August 2020. The shareholders will have between 17 August and 26 October to accept or refuse Evolution Gaming’s offer. The board of Evolution Gaming will have over 90 percent of the controlling interest of NetEnt if the bid is accepted.
Even though the global economy was hit hard, 2020 has been something of a ‘bounce back’ year for NetEnt after the company came under criticism by some in 2019 for simply rehashing old ideas and re-furnishing old slots and releasing them labeled as a brand ‘new’. There have been some exceptionally popular releases by NetEnt in 2020 including Gems of Adoria, Street Fighter 2 The World Warrior, and Robin Hood Shifting Riches. The news was also leaked recently that the company is giving one of its most popular slots – Gonzo’s Quest – a release with a ‘Megaways’ change-up, courtesy of Big Time Gaming and Red Tiger.
Evolution Gaming was also affected by the current market conditions as their online casino games almost exclusively revolve around online live casinos. However, the company did not close their live casino studios in response to the trying times they went through, but they did minimize the operations and allowed employees to work from home if such an option was possible for them. When you take a deep insight into the online gambling market, it seems inevitable that NetEnt’s shareholders will accept this bid from Evolution Gaming, although, for the player, this means that very little will change other than seeing that NetEnt’s games now come with the Evolution Gaming logo, just like WMS and SG Digital.
Conclusively, we can say that the statements provided by both the CEO’s of NetEnt and Evolution Gaming at this time, make it quite clear that something big lies ahead not only for the companies but for the gambling community as a whole. When asked upon the subject, Jens von Bahr, CEO of Evolution stated: “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.”
On the other side of the veil, Mathias Hedlund, the CEO of NetEnt commented that “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.” Solely from the information provided in these interviews alone, we can clearly see that there is a bright future that awaits both these companies, as merging their powers will definitely exponentially grow not only their influence on the gambling market, but vastly improve their market share as well, but is that good for competition? – We shall see in the times to come.