Las Vegas-based Global Cash Access Holdings Inc announced on Monday it is acquiring Multimedia Games Holding Co Inc for US$1.2 billion in cash.
The New York-listed firm – also known as GCA and which supplies cash processing technology and related services to the gaming industry – said it has agreed to acquire all the outstanding common stock of Multimedia Games for US$36.50 per share, representing a 31 percent premium to the closing stock price as of September 5.
The proposed acquisition will be financed with debt and cash on hand. Bank of America Merrill Lynch and Deutsche Bank have agreed to provide debt financing to GCA for the deal, the firm said.
The boards of directors of GCA and Multimedia Games have unanimously approved the transaction.
Multimedia Games is a creator and supplier of systems, content and electronic gaming units for Native American and commercial casinos. The firm also supplies the central determinant system for the video lottery terminals installed at racetracks in the state of New York.
“The acquisition of Multimedia Games represents a gaming-relevant transformational opportunity to combine two companies with rich gaming heritages and uniquely positions GCA as an important strategic partner to gaming operators by offering them deeper and more integrated solutions across their entire gaming floor,” Ram V. Chary, president and chief executive of GCA, said in a statement.
Mr Chary will continue in post after the merger is completed. The combined company’s headquarters will remain in Las Vegas and its game development operations will be based in Austin, Texas, where Multimedia Games has its headquarters.
The acquisition, still subject to customary closing conditions, is expected to be completed in early 2015.
GCA said the merger is expected to achieve “approximately US$30 million of synergies” – management speak for cost savings.
On a pro forma basis, the new entity is estimated to generate about US$800 million in revenues and approximately US$217 million in adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) based on the results for the year ended June 30.
Merger and acquisition activity on the gaming supplier industry has spiked in the last few months, with the announcement of several deals.
Italian lottery supplier GTech SpA is acquiring U.S.-based supplier International Game Technology for US$6.4 billion. Lottery equipment specialist Scientific Games Corp is buying Bally Technologies Inc in a US$5.1 billion leveraged deal.
U.S.-based JCM Innovation Corp last week said it has finalised the acquisition of FutureLogic Inc for US$70.6 million, excluding advisory fees. Other deals include the acquisition of US-based Video Gaming Technologies Inc by Australian gaming supplier Aristocrat Leisure Ltd.
“While we have anticipated ongoing consolidation in the equipment space given recent activity for Bally Technologies and IGT, the take-out of Multimedia Games by GCA in particular was not expected,” Union Gaming Research LLC wrote in a note.
It explained: “GCA’s core business is on the cash access, credit and payment solutions side of gaming, not in gaming technology development and distribution.”
The Union Gaming analysts added they would not consider “beyond the realm of possibility” the potential for another, more pure-play firm within the equipment space to step in with a competitive bid.
“With slow/no organic growth, and Multimedia Games clearly open to this take-out offer, it could therefore potentially be perceived as making ‘more sense’ for an existing equipment company actively seeking revenue synergy as well as cost synergy opportunities,” Union Gaming noted.
Apr 20, 2018Macau’s Judiciary Police said on Friday that a male Macau resident had been detained for alleged involvement in giving false information designed to attract public subscribers to a cryptocurrency...
Apr 20, 2018
Apr 20, 2018
Jan 04, 2018BMM Testlabs “ticks all the boxes” with regard to its...
Dec 08, 2017The regulated casino industry is well versed in dealing...
Oct 23, 2017The presence of some of the leading cloud computing...
Jul 11, 2017The Tokyo local election setback for Japan’s governing...
Jul 06, 2017A multibillion U.S. dollar casino project on Vietnam’s...
”We do not believe that reopening the advance notice nomination deadline [for board directors] is appropriate or justified”
Daniel Boone Wayson
Chairman of the Wynn Resorts board of directors