NeoGames
shares were soaring Monday after it agreed to be bought by Australian gambling technology developer
Aristocrat Leisure.
It is a deal which underlines the race to secure positions in online gambling in the U.S.
Aristocrat
(ticker: ALL.Australia), known for its slot-machine manufacturing business, will pay $29.50 a share in cash for
NeoGames
(NGMS), valuing the company at around $1.2 billion. NeoGames offers gambling software, including a digital lottery platform.
NeoGames shares more than doubled to $27.27 a share in early trading Monday.
Aristocrat said the deal valued NeoGames at 15 times its adjusted earnings before interest, tax, depreciation, and amortization for calendar 2023.
“The NeoGames team has built a great company with a strong platform and differentiated assets and we are pleased that Aristocrat recognizes the value we’ve created as a leader across iLottery, iGaming and online sports betting,” said John Taylor, chairman of the NeoGames board.
NeoGames surged after its initial public offering in late 2020 and briefly traded as high as $70 a share in 2021, but the stock has tumbled as initial excitement over the legalization of online gambling in various states in the U.S faded.
“We are constructive on the proposed sale for NeoGames. While we remain believers in the long-term high-quality iLottery opportunity, the likely gradual rollout across the U.S. coupled with a difficult macro environment for illiquid stocks presented a challenging outlook,” analysts at
Stifel
wrote in a research note on Monday.
The Stifel analysts said there appeared to be little risk of the deal not closing and there was favorable read-across to gambling technology provider
International Game Technology
(IGT).
IGT shares were down 0.8% early on Monday.
Write to Adam Clark at [email protected]
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