Sega Sammy Boosts iGaming Footprint with GAN Acquisition
LISTEN TO THIS ARTICLE:Sega Sammy Holdings, the Japanese gaming company, has reached a deal to purchase GAN for roughly $107.6 million.
According to the terms of the deal, Sega Sammy will pay $1.97 for each GAN share. This represents an increase of 121% on the closing price of GAN shares on November 7, the final trading day before the agreement was announced.
The acquisition of GAN is set to bolster Sega Sammy’s gaming division and its broader portfolio of gaming interests. Sega Sammy is already involved in the iGaming industry, running an integrated resort known as Paradise City in Japan and providing gaming machines and content via its Sega Sammy Creation division.
Sega Sammy Seeks US Expansion
The company is looking to extend its influence, particularly in the US online gambling market, where it sees significant growth potential. With more states in the US legalizing iGaming, Sega Sammy anticipates that current operators will grow and new players will enter the market. The purchase of GAN is expected to enable Sega Sammy to take full advantage of these opportunities.
Post-acquisition, GAN will combine with Sega Sammy Creation’s newly established special purpose entity, with GAN continuing as the surviving company. The completion of the deal is contingent upon various conditions, including approval from GAN’s shareholders, with a vote scheduled by March 2024 at the latest. If approved, the deal is expected to be finalized by the end of 2024.
Deal Set to Boost Sega Sammy Operations
Sega Sammy believes this move will significantly enhance their gaming operations and offerings. The synergy between GAN’s leading online gaming technologies and Sega Sammy Creation’s content development and customer base in North America is anticipated to broaden the distribution of Sega Sammy Creation’s content and extend its customer reach.
Seamus McGill, acting CEO and chairman of GAN, considers the acquisition an optimal route for maximizing shareholder value.
After a thoughtful review of value creation opportunities available to us, we are pleased to have reached this agreement with SSC. Market share concentration in the US B2C space, a slower-than-expected adoption of regulated online gaming in the US, along with changes to key customer contracts make the near-term operating environment challenging without ample capital resources. Sega Sammy has those resources. GAN is a strategic complement to their existing gaming portfolio. We believe this all-cash offer, at a substantial premium to recent trading prices, is the value-maximising path for our shareholders.
Deal Provides Certainty for GAN
GAN’s future was previously uncertain, prompting a strategic review in early Q1 to explore various options for enhancing shareholder value. These discussions included the potential sale of parts or all of the business. The announcement came alongside news of Dermot Smurfit’s departure as CEO after over two decades, with McGill stepping in as interim CEO. McGill brings experience from various roles, including at Joingo, Aristocrat Technologies, Cyberview Technology, and WMS Gaming.
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