Australia-based slot machine maker Ainsworth Game Technology Ltd on Tuesday announced that its major shareholder and executive chairman, Len Ainsworth, has agreed to sell his 53-percent stake in the company to Novomatic AG, a privately owned Austria-based gaming technology company.
Mr Ainsworth agreed to sell his 172.1 million ordinary shares at AUD2.75 (US$1.99) per share for a total cash consideration of about AUD473.3 million, subject to regulatory and licence approvals, Ainsworth Game said in a filing to the Australian Securities Exchange (ASX).
Mr Ainsworth will still hold a small number of shares that remain subject to employee options under the Len Ainsworth Option Share Trust, the firm added.
“The board of Ainsworth Game supports the transaction and will convene an extraordinary general meeting (EGM) of … shareholders to seek the necessary approval,” the slot machine maker said.
“The EGM will be held within three months and further details will be provided to shareholders in due course.”
If the share sale completes, Novomatic intends to maintain its holding at around 53 percent and will retain Ainsworth Game’s listing on ASX, the Australian firm said in Tuesday’s filing.
“I’m pleased Novomatic, in agreeing to acquire my shareholding, has committed to Ainsworth and our international growth strategy. Novomatic … has a clear commitment to innovation and new product development, which aligns with Ainsworth Game. With its strength and support, Ainsworth’s future is assured and our potential is increased,” Mr Ainsworth said in a statement.
The current board and executive management teams of Ainsworth Game will stay in place with Novomatic planning to nominate additional directors, said the Australian firm. Mr Ainsworth will remain as chairperson, it added.
“Novomatic has further indicated that it supports Ainsworth Game’s strategy to build a larger, diversified and more profitable international game technology company,” said the ASX-listed company.
Under the agreement, Novomatic is expected to provide “significant game development and other intellectual property” to Ainsworth Game and jointly work on a global distribution and marketing strategy, said the slot machine maker.
“Ainsworth Game is excited by this prospect and will work with Novomatic on the details and execution in the coming months,” the firm added.
Commenting on the deal, Novomatic owner Johann F. Graf said in a statement: “Ainsworth is iconic and we are delighted to become substantial shareholders in the company (if shareholder approval is granted). We support the board and management’s strategy and look forward to assisting the company as it continues to successfully build its international footprint and profile.”
Novomatic is both a gaming manufacturer and operator. The company operates more than 235,000 gaming devices and video lottery terminals in more than 1,600 outlets including gaming parlours and casinos, according to its corporate website.
The Austria-based company is active in several gaming segments including casino, lottery, sports betting, online and mobile.
First half results
On Tuesday, Ainsworth Game announced a net profit after tax of AUD33.1 million for the six-month period ended December 31, 2015, a decrease of 4.3 percent on the previous corresponding period. The strengthening of the U.S. dollar against the Australian dollar during the reporting period positively impacted the results, the firm said.
Excluding currency gains, net profit after tax was AUD26.3 million, an increase of 7 percent from the prior-year period, the company stated.
Ainsworth Game reported revenue of AUD141.9 million for its fiscal first half, up by 26.8 percent from the prior corresponding period. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 6.9 percent year-on-year to AUD53.8 million.
The company said the Australian market remains “challenging and highly competitive”. The firm’s domestic business reported a 6 percent fall in revenues and a 33 percent reduction in profitability.
International revenues grew by 57 percent year-on-year to AUD91.6 million. Overseas sales represented 65 percent of total revenues in the six months to December 31, the company said.
Ainsworth Game in January completed the US$38-million acquisition of U.S.-based Nova Technologies LLC, a manufacturer of products referred to in U.S. markets as “Class II” games.
The Australian firm said the market in Asia “remains subdued”. “A number of new properties are due to come on stream in Macau, the Philippines and in time, [South] Korea, which could provide additional opportunities,” it added.
“The evolution of Ainsworth into large offshore markets is continuing in line with our strategy. We are becoming a stronger and more diversified gaming and technology group with higher quality earnings, backed by a strong balance sheet,” said Ainsworth Game’s chief executive, Danny Gladstone.
The firm declared an interim dividend of AUD0.05 per share, expected to be paid on May 2.
For the full fiscal year ending June 30, Ainsworth Game said it expects net profit after tax, excluding currency gains, to be similar to the AUD52.5 million reported in the previous year.
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Professor emeritus at Whittier Law School in California, in the United States, and a visiting professor at University of Macau