Evolution Gaming Offers $3.05 Billion For NetEnt

Evolution Gaming and NetEnt are to become one massive company after the former tabled a SEK19.6 billion ($3.05 billion) offer. Evolution Gaming said the new company will be a world leader in the online gaming industry.

Shareholders of both companies need to decide to give the acquisition the green light. Industry experts don’t envisage any issues because the offer is way over what NetEnt is worth. The offer values NetEnt’s shares at a shade under SEK80 ($12.48), a 43% premium over the current share price.

NetEnt has some long-term family shareholders who have a major influence over the business. These shareholders own 68.2% of the stock and therefore votes, and 29.5% of NetEnt’s capital. Those shareholders have either signed off on the deal or indicated that’s their intention.

Shareholders love to hear the company they’ve invested in is looking to save money. Cost-cutting measures usually lead to larger profits and more substantial dividends. They’re in luck because Evolution Gaming estimates €30 million ($49.02 million) annual savings once the deal completes.

The two brands combined had revenues of €536 million ($875.9 million) in 2019, but there’s potential for much more. Both struggled to acclimatise to the new rules and regulations in Sweden, for example. Each company enjoyed growth in the United States while Evolution’s Asian business almost tripled in Q1 2020.

Live Dealer Casino Propels Evolution Gaming

NetEnt is one of the pioneers of online casino products so it’s surprising to see Evolution Gaming swallow them up. Evolution Gaming was formed after NetEnt but has risen above them in recent time. This is partly due to Evolution’s exceptional live dealer casino games. Hundreds of online casinos around the world use the live dealer casinos from Evolution. This in turn generates a ton of revenue.

Analysts believe a recent acquisition by NetEnt is the catalyst for this takeover bid. NetEnt paid £220 million ($394.5 million) for Red Tiger Gaming in September 2019. Red Tiger Gaming is renowned for its daily jackpot games, another extremely popular format.

That deal happened only nine months ago and the industry has a feeling Evolution wanted Red Tiger Gaming for itself. Now it looks like it’s getting it as part of the NetEnt bundle.

The sky is the limit for Evolution gaming once this deal completes. They have the live dealer market cornered and now have a portfolio of pokies to rival anyone. Evolution will be a market-leading if its current growth continues.

Bosses Of Both Companies Look Delighted With The Deal

Jens von Bahr and Mathias Hedlund are the chairmen of Evolution Gaming and NetEnt respectively.

Hedlund was keen to talk up the technology NetEnt provides.

“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.”

Von Bahr called the deal a landmark one.

“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.”

“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.”

“The combination will also allow the newly combined entities to leverage a strong position within the US states that have opened their markets for igaming services.”

What Does The Deal Mean For You?

You won’t notice any difference, in the short term, when this deal goes through. The majority of changes take place behind the scenes. In the longer term, however, expect to see new, innovative pokies and casino games as the two igaming Goliath’s combine their resources. The new company is nowhere near the size of that of Flutter Entertainment and The Stars Group. It has the potential to grow that size in the coming years.