LAS VEGAS - Evolution AB’s subsidiary, Evolution Malta Holding Limited, has agreed to acquire casino game developer Galaxy Gaming, Inc. (OTC:GLXZ) for a total equity value of approximately $85 million in cash. This deal, representing a 124% premium over Galaxy Gaming's last closing share price before the announcement, aims to enhance Evolution's position in the US market and its global reach in the online gaming sector.
Galaxy Gaming, known for its diverse range of innovative casino table games and technology solutions, is positioned to complement Evolution's portfolio and strategic goal of being the world's leading casino game provider. The acquisition is expected to unite both companies' customer-focused approaches and expand their operations.
Evolution plans to retain Galaxy Gaming's management and operate it as an independent unit, leveraging its operational and financial resources to foster growth. Galaxy Gaming's projected financials for 2024 estimate net revenue between $29.0 and $30.0 million, with an Adjusted EBITDA of $12.0 to $13.0 million.
The transaction, which includes approximately $124 million in net debt, will be financed with cash on hand. It has received approval from Galaxy Gaming's board, and board members holding around 14% of the common stock have agreed to support the deal. Completion is subject to stockholder approval and gaming regulatory approvals, with an expected closing in mid-2025.
Evolution has engaged J.P. Morgan SE and Kirkland & Ellis LLP as its financial and legal advisors, respectively. Galaxy Gaming has appointed Macquarie Capital and Latham & Watkins LLP for the same roles.
This announcement is based on a press release statement and contains forward-looking statements subject to risks and uncertainties, including the successful integration of the businesses and the realization of anticipated benefits from the acquisition.
Evolution AB, founded in 2006 and headquartered in Sweden, is a B2B provider of Live Casino solutions with over 800 operators as customers and is listed on Nasdaq Stockholm under the ticker EVO. Galaxy Gaming, based in Las Vegas, holds 131 licenses worldwide and is a leading licensor of proprietary table games to the online gaming industry.
In other recent news, Galaxy Gaming, a Nevada-based company, has announced the extension of its 2014 Equity Incentive Plan for an additional ten years, effective from January 1, 2024. The plan, initially established to provide eligible employees, directors, and consultants with the opportunity to acquire a proprietary interest in the company, is a strategic move to attract and retain top talent in the competitive gaming and entertainment industry.
This decision was disclosed in a Form 8-K filed with the Securities and Exchange Commission (SEC), with a detailed Amended and Restated Plan attached as Exhibit 10.1. The amendment aims to align the interests of its stakeholders with those of the company by providing equity-based incentives.
Galaxy Gaming's Chief Financial Officer, Steven Kopjo, signed off on the filing, underscoring the company's commitment to transparency and adherence to regulatory requirements.
The announcement does not detail specific allocations or awards under the Amended and Restated Plan, which typically includes options, stock appreciation rights, restricted stock, and other equity-based awards. These types of plans are common in the industry as a means to motivate employees through ownership stakes and potential financial gains tied to the company's performance.
InvestingPro Insights
In light of the recent acquisition announcement by Evolution AB, it's valuable to take a closer look at Galaxy Gaming's financial metrics and strategic positioning through InvestingPro data and tips. Galaxy Gaming, with a market capitalization of $34.94 million USD, shows potential for growth with a revenue increase of 13.71% over the last twelve months as of Q1 2024. This growth is further evidenced by a gross profit margin of an impressive 95.36% in the same period, highlighting the company's ability to maintain profitability on its sales.
Despite not being profitable over the last twelve months, as indicated by a negative P/E ratio of -21.04, Galaxy Gaming's liquid assets exceed its short-term obligations, suggesting a solid financial footing for the immediate future. This is an InvestingPro Tip that may reassure investors concerned about the company's ability to meet its short-term liabilities, particularly in the context of an acquisition.
Another InvestingPro Tip to consider is Galaxy Gaming's high return over the last decade, which could signal a long-term value for Evolution AB as it integrates Galaxy Gaming's offerings. While Galaxy Gaming does not pay a dividend, the strategic benefits of the acquisition may lie in other areas, such as market expansion and product diversification.
For those interested in an in-depth analysis of Galaxy Gaming and potential investment opportunities, there are additional InvestingPro Tips available at https://www.investing.com/pro/GLXZ. To access these insights and more, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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