Evolution Gaming Go All in with a €1.96 Billion Netent Buyout Bid

The iGaming world was rocked today by news of an astounding new buyout offer that has been tabled by live dealer provider Evolution Gaming. Since its inception in 2006 Evolution Gaming has focused solely on creating world-class live dealer games, yet their potential acquisition is one of the best RNG casino developers in the market, NetEnt.

To show they are serious about becoming a global gambling powerhouse Evolution put in a bid of SEK 19.6 billion, which equates to approximately €1.96 billion at today’s exchange rate.

Jens von Bahr, Chairman of the Board, Evolution Gaming said:

“This strategic acquisition is an important part of Evolution's long-term vision to become a market leader in the global online gaming industry. The combination of Evolution's strong offering in live casino and NetEnt's leading position in online slots will result in a portfolio of world-class online games that will enable us to serve a growing customer base.”

With NetEnt’s 2019 acquisition of Red Tiger Gaming for €220 million pulling off this acquisition would see Evolution Gaming springboard into ranks of iGaming founders like Playtech and Microgaming in terms of product suite and influence within the larger industry.

✓ Why NetEnt and Why Now?

Evolution Gaming outlined their rationale for the acquisition to their investors as follows:

• Landmark deal will accelerate Evolution’s move towards becoming the world leader in the online gaming industry
• Best-in-class B2B provider with to drive the digitalisation of the global gaming industry
• The merger will accelerate the combined company’s move into the US online gaming market
• The combined product portfolio includes some of the world’s most popular Live Casino and slots games
• The combined product offering will provide significant upsides to customers and player experience
• Collaborations between world-class product development resources
• A strong platform for international growth and expansion, both organic and through additional acquisitions

Besides all the talk of growth and influence, there is, of course, a massive financial upside in combining these leading casino game developers, not only in terms of their current games and market penetration but with an eye to gaining more ground in the burgeoning United States gambling market.

✓ Eyes on the North American Prize

In investor outline, the fact that the US online gambling market is a stand-alone point out of a list of seven is telling. In fact, both the Evolution Gaming and NetEnt Chairman made specific reference to this expansion in their official statements.

Jens von Bahr of Evolution Gaming said:

“In addition, the combination of NetEnt's established position in North America and Evolution's existing studios in the US and our so-called first to regulated market strategy will put us in an advantageous position to capitalize on the ongoing regulation in North America.”

While Mathias Hedlund, Chairman of the Board, NetEnt added:

“In recent years, NetEnt has improved its tech and product development capabilities and thereby its growth potential while at the same time achieving a strong position in the states of the US that have opened up for online casinos. Through this transaction, unique opportunities are created to form a leading B2B supplier in online casinos and take full advantage of the market developments with continued digitalisation and strong growth, especially in North America.”

With a suite of award-winning RNG video slots and arguably the leading live casino game solution on the market presented to both potential online gambling operators and state-level decision-makers the US alone could become the goldmine that pays for the buyout and then some.

✓ The Details of the Deal

While the terms of the deal are boggling it was presented to their shareholders for consideration in a very succinct 5 point bulletin:

1. Evolution offers 0.1306 Evolution shares for each share in NetEnt. Evolution will not increase the offered consideration.
2. The Offer values each share in NetEnt to SEK 79.93 and all shares in NetEnt to approximately SEK 19.6 billion.
3. The offered consideration represents a premium of 43 per cent compared to the closing price of the NetEnt share of series B on Nasdaq Stockholm on 23 June 2020 (which was the last trading day prior to the announcement of the Offer) and a premium of 72 per cent compared to the volume weighted average price per NetEnt share of series B on Nasdaq Stockholm during the 30 latest trading days up to and including 23 June 2020.
4. The board of directors of NetEnt unanimously recommends the shareholders of NetEnt to accept the Offer.
5. Shareholders who in total directly or indirectly control 21.02 per cent of all shares and 45.02 per cent of all votes in NetEnt have undertaken to accept the Offer. In addition, certain board members of NetEnt who in total directly or indirectly control 8.48 per cent of all shares and 23.20 per cent of all votes in NetEnt have expressed that they intend to undertake to accept the Offer.

As further proof of their intent to make the deal happen Evolution Gaming tabled the estimated settlement date for the agreement as November 2nd, 2020, a mere four months from now.