The two companies weren’t shy about the terms of the deal, either. Namely, Evolution offered 0.1306 Evolution shares for each of the shares in NetEnt. The value of NetEnt shares was set at SEK 79.93, which represents a premium of 43% compared to the closing price on Sweden’s Nasdaq Stockholm on 23 June 2020.
A majority of large shareholders in NetEnt are long-term family shareholders who own around 30% of the company’s capital and represent close to 70% of the votes in the board of directors which has recommended taking the deal. What’s more, the remaining board members are also inclined towards accepting the agreement which will see Evolution Gaming become the owner of more than 90% of all NetEnt shares. Evolution Gaming said that the offer document would be published around 14 August 2020, and further stated the intention to finalize the deal by the end of October 2020.
The Reasons for the Purchase
Jens von Bahr, chairman of Evolution Gaming, commented extensively on the deal. It is his belief that in the future, 50-60% of all gaming will be moved to the online sphere, compared to the 10% it holds at the moment, with 90% of all casino gaming still being done in land-based facilities. Also, being a leader in live dealer games, Evolution Gaming wants to expand into RNG software games, and NetEnt is the perfect partner for that move.
In addition, NetEnt is a software provider that already has a strong presence in the rising USA online gambling market through its RNG video slots. In contrast, Evolution Gaming has already established a live dealer studio in New Jersey, with two more, in Pennsylvania and Michigan expected in the coming period. With this merger, both companies will speed up their development process and take significant shares in this market with huge potential.
Moreover, Evolution Gaming expects the deal to result in more than $30 million in annual savings, cut down the operational costs, and drive the earnings per share starting as early as the first quarter of 2021.
What Does the Future Hold for Evolution Gaming and NetEnt
In all likelihood, this landmark deal is going through, and Evolution Gaming is expected to become the owner of NetEnt. The companies generated combined revenue of around €536 million in 2019, thanks to the newly-regulated markets of Sweden and other jurisdictions where these companies conduct business, and the revenue is expected to be driven by cost reduction and an increase in savings.
The purchase is already making tectonic shifts in the industry, the reverberations of which are going to be felt for months and years to come. With NetEnt under its wings, Evolution Gaming is going to control a large chunk of the market and position itself as the global powerhouse whose reach goes beyond Europe.
What’s more, the global pandemic of COVID-19 demonstrated that online gaming has vast potential, and Evolution Gaming is ready to tap into that potential and cement its position as the leader in the industry when the full shift from land-based to online gaming finalizes in the future.