Global gaming content and technology company Aristocrat Leisure [ASX:ALL] has moved to acquire 100% of NeoGames for the enterprise value of $1.8 billion.
This is to transpire over a cash price of $29.50 per share for the new company, valuing it at around $1.5 billion, a premium to the three-month volume weighted average share price.
Finalising the acquisition will be subject to a few things, like shareholder and regulatory approval.
Aristocrat believes the acquisition will buff its growth strategy and offers certain benefits, such as wider market scale, further revenue opportunities, and other international growth prospects.
ALL shares have been boosted 27% so far in 2023, and 23% in the past full year. In its sector, the gaming giant is up 17%, and it’s up 21% on the S&P 200 average:
Source: marketindex.com
Aristocrat Leisure set to acquire NeoGames
Today, Aristocrat announced the proposed acquisition of NeoGames for a cash price of US$29.50 per share, which values NeoGames’ fully diluted equity for around US$1.0 billion (AU$1.5 billion).
The price also represents a premium of approximately 104% to the three-month volume weighted average price of NeoGames shares (for the period ended 12 May 2023) of approximately US$14.45 and implies an enterprise value of US$1.2 billion (AU$1.8 billion).
For those wondering about the new company to be acquired, Aristocrat relayed NeoGames is a global leader in content and technology solutions for the online RMG (real money gaming) industry, including a range of value-based services across iLottery, iGaming, and Online Sports Betting.
In finalising the acquisition, the company said there will be a multiple of around 15 times NeoGames’ Adjusted EBITDA for the 12 months to 31 December 2023.
Aristocrat believes the acquisition should accelerate its growth strategy and deliver benefits to its position in the growing online RMG market (a market worth US$81 billion, as well as delivering certain material and revenue-boosting opportunities). This is to occur through combining Aristocrat’s content with NeoGames’ customer and regulatory relationships tech and platforms.
Aristocrat will also benefit from NeoGames’ experienced management team, who will continue business and contribute to Aristocrat’s online RMG growth.
Lastly, the gaming group expect attractive financial returns and growth, including its Earnings Per Share — before amortisation — to be accretive from the first full year, FY2025.
Aristocrat’s CEO Trevor Croker commented:
‘Bringing together NeoGames and our growing Anaxi business will position Aristocrat with global scale and capability in the growing online RMG industry.
‘We see great opportunities in the combination of our complementary businesses, with clear revenue and growth potential that comes with a complete and seamless online RMG solution. NeoGames also shares a strong commitment to sustainability, responsible gameplay and people-first culture which is central to everything we do.
‘This proposed acquisition builds on the strength and resilience of our business, expands market opportunities and adds capabilities to unlock our full potential. We remain focused on executing our proven growth strategy, and creating long-term value for Aristocrat shareholders.’
Aristocrat intends to fund the acquisition with $1.8 billion cash on hand, which includes payment of transaction expenses.
Post-acquisition, Aristocrat expects to move from a net cash position to a geared balance sheet, with pro forma net debt/EBITDA of around 0.7 times as at 30 September 2022.
The group also said that its balance sheet strength has enabled it to increase its existing on-market share buyback program by up to a further $500 million.
This brings the total program size to up to $1.5 billion. The program will run up to 31 May 2024.
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