When it comes to the theory of evolution in natural science it often goes hand in hand with the concept of the “survival of the fittest”. This assumes that the best of the breed will rise to a position of power, if not dominance, within its given ecosystem.
With Evolution Gaming’s latest high-value acquisition, the company is well on its way to becoming an apex predator in the online gambling space.
Gobbling Up the Competition
Leaders in the live casino space, Evolution Gaming, announced in a press release that they have entered into an agreement with slots developer Big Time Gaming to acquire the company for €450 million.
Jens von Bahr, Evolution Gaming chairman, said:
“With the addition of Big Time Gaming to our portfolio of slot brands we strengthen our strategic position as the leading provider of digital casino games in the world. Big Time’s focus on innovation and creating unique playing experiences is a great fit with our culture and mindset at Evolution. We look forward to continuing our journey together.”
In addition to their extensive library of video slots, Big Time Gaming is well known in the industry for its innovative Megaways mechanic that allowed any 6-reel slot machine to offer players up to 117,649 ways to win.
Best of all it could be retroactively applied to existing slot titles, allowing online casinos to offer the standard game and then the expanded Megaways variant for fans to enjoy, as was the case with NetEnt’s Gonzo’s Quest Megaways.
Show Them the Money
The deal structure is a Win-Win for Big Time Gaming stakeholders as not only does it include a sizable cash upfront but also shares in the industry behemoth that is Evolution Gaming.
The €450 million will be paid out as follows:
- €220 million upfront: Evolution has agreed to pay out a cash settlement of €80 million upon completion of the deal, with a further €120 million in Evolution Gaming shares.
- €230 million earn-out: By the end of 2024 Evolution will have paid out an additional €161 million in cash, and a further €69 million in Evolution Gaming shares.
In the case of all share payments - those due in 2021, 2023 and 2024 - the values for the shares will be a volume-weighted average of the Nasdaq Stockholm share price immediately prior to the payout. In the case of the initial €120 million share payout, this period will be 23rd March – 7th April 2021.
Scanning for New Targets
While Evolution began its life as a leading developer in the extremely niche, if not almost overlooked, live dealer sector they have certainly made their presence and their intent known over the last few years by acquiring several major competitors.
In 2018 they acquired direct live casino game competitor Ezugi, putting them at the head of the live casino market in the US.
After going under the radar for nearly two years the company then grabbed headlines in 2020 with its industry-shaking acquisition of slots behemoth Netent for approximately €1.8 billion. A real coup considering Netent themselves had just acquired their closest competitor Red Tiger only months before.
Having evolved far beyond its humble beginnings as a live casino games company Evolution now own some of the most highly recognised slot development studios in the industry placing them shoulder to shoulder with the likes of Microgaming and Playtech in terms of reach and offering.
The real question now is which company Evolution has in its sights next? It is probably too soon to take one of the titans, however, with their ability to predict player interests and behaviours we could see them pursuing indie developers in the augmented reality and virtual reality space, as these are untapped markets with growing appeal and massive potential.