- NetEnt acquired casino software supplier Red Tiger Gaming Limited.
- It’s an all-cash deal with an initial enterprise value of £200 million, plus a possible additional amount of maximum £23 million in 2022.
- Therese Hillman, Group CEO of NetEnt, said “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. “
Today, NetEnt announced that it has acquired casino software supplier Red Tiger Gaming Limited in an all-cash deal with an initial enterprise value of £200 million, plus a possible additional amount of maximum £23 million in 2022. This transaction has been finalised and is anticipated to be accretive to NetEnt’s EPS in 2020.
The deal is in line with NetEnt’s vision to set the standard for the future of gaming. Over the last few years, the company has invested in a global infrastructure focusing on customer reach and regulated markets, supporting a platform for scale. The acquisition of Red Tiger gives NetEnt the opportunity to capitalize on its scalable technology to support future growth.
Red Tiger was established back in 2014, and is a leading online supplier of casino games and software renowned for its daily jackpot games. The company has approximately 170 employees with operations in Malta, Isle of Man and Bulgaria. Red Tiger’s earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to reach GBP 18 million for the full year 2019.
Speaking on this, Therese Hillman, Group CEO of NetEnt, said, “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.”
Gavin Hamilton, CEO of Red Tiger, comments: “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.”
NetEnt has paid an initial consideration of roughly £197 million for 100% of the shares of Red Tiger. Along with the initial purchase consideration, a remaining amount of maximum £23 million may become payable in 2022 on an earn-out basis, subject to Red Tiger’s financial performance over the next two years. This implies a maximum enterprise value of £223 million, corresponding to an enterprise value multiple of c. 12 times current year EBITDA. NetEnt’s income for the third quarter of 2019 will include around SEK 55 million of transaction- and financing-related costs.
The acquisition is financed primarily through new debt facilities provided by Danske Bank and Nordea while Lazard has acted as financial advisor and Cirio Advokatbyrå has acted as legal advisor to NetEnt in connection with the transaction.
Launched back in 1996, NetEnt is pioneer is developing games for online casino. In 2013, they expanded their selection of video slots to include live casino made of premier, studio-based blackjack and roulette tables. The company is listed on NASDAQ Stockholm (NET–B) and employs around 1 000 people in Malta, Stockholm, Kiev, Krakow, Gothenburg, Gibraltar and New Jersey. Take a closer look in our NetEnt Live review.