Casino currency and table gaming equipment supplier Gaming Partners International Corp (GPI) announced on Friday that it has entered into a binding letter of intent to purchase the assets of Dolphin Products Ltd, a subsidiary of gaming supplier Entertainment Gaming Asia Inc.
Under the letter’s terms, GPI will acquire the assets of Dolphin including fixed assets, raw materials and inventory, and intellectual property, for an estimated US$5.9 million in cash, subject to a count of physical inventory at the time the deal is closed.
In addition, GPI will make earn-out payments to Entertainment Gaming Asia over the next five years “based on a varying percentage of net revenues on certain select sales to specific Asian-based casinos,” the companies said in a press release. Earn-outs are typically additional payments made to the owner of a business entity after it is sold to other parties.
Nasdaq-listed Entertainment Gaming Asia operates slot machines on a participation basis and manufactures and distributes gaming chips, gaming plaques and related products to casinos in Asia and Australia under the Dolphin brand.
Casino investor Melco International Development Ltd – a company controlled by Lawrence Ho Yau Lung – holds approximately 65 percent of Entertainment Gaming Asia.
The asset sale represents Dolphin’s and Entertainment Gaming Asia’s exit from the table game equipment business. As part of the transaction, Dolphin and Entertainment Gaming Asia will each agree not to engage in the manufacture of table game equipment in competition with GPI, according to the press release.
GPI said the companies anticipate negotiating a definitive asset purchase agreement and closing the transaction in May.
GPI stated in its annual results report – published in March – that in December 2015 it started legal proceedings in Hong Kong against a former employee of its European subsidiary and Dolphin Products. The firm said that the former worker allegedly “breached the confidentiality provision of his severance agreement by divulging GPI trade secrets to a competitor,” which GPI identified as Dolphin Products.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia