Evolution Gaming bid over $2 billion for NetEnt to strengthen market dominance
Evolution Gaming caused excitement in the iGaming industry on Wednesday June 24 when it announced a $2.12 billion bid for leading casino game provider NetEnt.
The move values NetEnt at around $8.50 per share, its highest in nearly three years, and the company’s board of directors swiftly moved to recommend the purchase to shareholders.
The deal is expected to lead to combined annual cost savings of around €30m for the two entities, compared to the accounts for the first quarter of 2020. The savings should appear fully during 2021.
If the shareholders accept the bid, it will hugely strengthen Evolution’s position in the iGaming market, tying in with their strategy of broadening their range of casino games, as well as boosting their earnings through cost savings.
Their earnings per share is also expected to rise significantly through the revenue synergies created by the takeover.
Jens Von Behr, the chairman of Evolution, called the deal a ‘significant step towards the company’s long-term vision of becoming a global market leader in the online casino industry’. He predicted a ‘world class portfolio of online games that will serve a growing customer base’.
It marks the latest strategic move for the company, in operation since 2006, that is already one of the most important B2B providers in the industry.
They count over 300 operators among their customers and their 8,000-strong workforce is spread across North America and Europe, including in its native Sweden where it is listed on the Nasdaq Stockholm.
NetEnt, well known for their innovative slots games, such as Street Fighter II and Narcos, represent the ideal purchase to suit this strategy, offering some of the finest online slots expertise in the industry, as well as a proven track record in successful titles.
Their acquisition of Red Tiger Gaming in September 2019 marked out their ambition, and might have made them an even more attractive proposition for Evolution.
They also have an established US presence which combines well with Evolution’s existing North American studios and will see them capitalise on the growing North American market.
The takeover would also prove extremely beneficial to NetEnt. Evolution’s dominant position in the live casino industry, where they provide solutions to a wide range of online casinos, would see them become part of a rapidly growing company well-positioned to claim a huge share of the market.
Matthias Headlund, NetEnt chairman, called it a ‘landmark deal’ and predicted ‘a new chapter in the development of more entertaining online casinos’.
His words seem appropriate in a time of growing digitalisation in the online entertainment industry, where the number of online users appears to be rising in several countries due to the COVID-19 pandemic.
This takeover could be the first of many as companies battle to keep up with the pace of change.
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