NetEnt entered into an agreement to buy the online slot supplier Red Tiger Gaming in an all-cash deal with an initial enterprise value of almost 223 million euros plus a possible additional amount of around 25 million euros in 2022. The transaction will be completed imminently and is expected to be enter NetEnt’s EPS in 2020.
Red Tiger Gaming is a leading online provider of casino games and software established in 2014 and renowned for its daily jackpot slots. The company has about 170 employees and has offices in Malta, Isle of Man and Bulgaria. Red Tiger’s earnings before interest, taxes, depreciation and amortization is expected to reach 20 million euros for 2019.
The deal is in line with NetEnt’s vision to create the future of gaming and online slots. Over the last 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 salable technology to support future growth.
Therese Hillman from 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 from Red Tiger Gaming said:
“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 pays an initial consideration of approximately 220 million euros for all Red Tiger shares. In addition to the initial purchase consideration, a remaining amount of maximum 25 million euros may become payable in 2022 on an earn-out basis, subject to Red Tiger’s financial performance over the coming two years. This implies a maximum enterprise value of 250 million euros, corresponding to an enterprise value multiple of c. 12 times current year EBITDA. NetEnt’s income for the third quarter of 2019 will include approximately SEK 55 million of transaction- and financing-related costs.
The acquisition is financed primarily through new debt facilities provided by Danske Bank and Nordea.
Lazard has acted as financial adviser and Cirio Advokatbyrå has acted as legal adviser to NetEnt in connection with the transaction.