Prolific and fast-growing online slot supplier, Red Tiger Gaming Limited, was acquired by iGaming giant, NetEnt. As far as the agreement states, NetEnt will purchase Red in an all-cash deal. The initial enterprise value is GBP 200 million, plus a possible additional sum of maximum GBP 23 million in 2022.
The leading supplier’s income for the Q3 of 2019 accounts approximately for SEK 55 million of the transaction- and finance-related costs. The transaction will be completed imminently and is expected to make a significant impact on NetEnt’s EPS in 2020.
The all-cash deal will be divided into two phases…
…with an initial consideration of roughly GBP 197 million for 100 percent of Red Tiger’s shares. The remaining amount of maximum GBP 23 million may become payable in 2022 on an earn-out basis, subject to its financial performance over the next two years.
This means that total enterprise value is GBP 223 million. The sum corresponds to an enterprise value multiple of c. 12 times current year EBITDA.
Enhancing Global Reach
The agreement corresponds to NetEnt’s vision to create the future of gaming. Over the past several years, the brand made significant investments in global infrastructure. The main focuses were customer reach and expansion across regulated markets. The recent acquisition allows the company to capitalize on its scalable technology to push forward future growth.
Therese Hillman, Group CEO of NetEnt commented on the deal as follows
“I am very pleased to welcome Red Tiger into the NetEnt Group. The acquisition combines two of the leading and most innovative companies in the online gaming industry. We look forward to working with Red Tiger’s fantastic team to enhance our combined global reach and to offer further value to operators and players. The transaction will provide significant revenue synergies across our markets worldwide.”
Established in 2014, Tiger has quickly became recognized as a highly-productive online supplier of casino games and software, as well as daily jackpot games.
The team employs around 170 enthusiasts from various fields, with operations in Malta, Isle of Man and Bulgaria. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to reach GBP 18 million for the full year 2019.
Commenting on the successful alignment, Gavin Hamilton, CEO of Red declared as follows:
“This is an exciting new stage of the Red Tiger story and we are delighted to become part of the NetEnt group. Accessing NetEnt’s unparalleled distribution network and geographic footprint will unlock new opportunities for Red Tiger and will further accelerate our growth. At Red Tiger, we’ll remain focused as always on driving further innovation and we are looking forward to working with NetEnt on how to leverage our combined capabilities to create new products that wow our customers.”
SOURCE: “NetEnt acquires casino software provider Red Tiger”. NetEnt. September 5, 2019.