In a huge move, sure to send tidal wave sized ripples through the iGaming world, Evolution Gaming has made a bid to take over industry titans NetEnt. The deal follows hot on the heels of a fairly recent acquisition NetEnt made, buying out Red Tiger Gaming in a deal worth hundreds of millions of Euros. This new conglomerate would create a formidable team, fuelling Evolution’s goal of becoming a leader in online gaming.
The deal comes with some seriously eye-watering figures. Evolution’s offer values NetEnt’s shares at SEK 79.93 (€7.59) each, putting the total value of the deal at SEK 19.6 billion (€1.96 billion). This constitutes a premium on each share of 43%. An offer too good to pass up for NetEnt’s board who unanimously recommended that NetEnt shareholders accept the deal.
The initial stage would see Evolution come into ownership of 90% of the shares. This would lead to a compulsory buy of the remaining shares as laid out in law by the Swedish Companies Act.
An official offer document will be released by Evolution mid-August, while acceptance will need to be made by October 26, 2020. So far, shareholders on both sides have been positive and at this stage little stands in the way of the deal going through.
So why the offer? The Evolution/NetEnt/Red Tiger combo is predicated to cut annual costs by as much as €30 million for one. Second, the combined portfolio of games will include some of the best live gaming, with some of the finest slots online. Evolution is one of the few live gaming companies to hold an eCOGRA certificate, and along with NetEnt/Red Tiger slots, will radically drive the digitalise of the casino industry.
Jens von Bahr, Chairman of Evolution, said that the deal is: ‘…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.’
Mathias Hedlund, Chairman of NetEnt, was also positive: ’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.’
Combining forces is predicted to dramatically improve cross-selling/upselling opportunities, tap into each other’s customer basis to widen markets. The merge opens up new sections of the world, streamlining distribution, enhancing customer and players’ experience.
The deal is evidence of a sharp eye on the long term, particularly the penetration of the lucrative US gambling scene. Evolution presently has a Live Casino operation in New Jersey while planning an expansion in Michigan and Pennsylvania. Combine this with NetEnt’s already positive presence in the US, and the deal has the potential to blow the doors wide open on the huge market.
On this, Bahr stated: ‘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.’
Mathias is in agreement: ‘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.’
Should the deal go through, and there are no apparent reasons why it will not, Evolution are set to become a dominant force in the online gaming industry. When NetEnt bought out Red Tiger, speculation over possible collaborations were rife. Now that Evolution is adding themselves to the mix, what can we expect in the future? Anyone taking bets on Starburst Megaways Live, streamed from a New Jersey studio?