A gaming machine manufacturer is acquiring a casino and sports betting software company.
Media and gaming conglomerate Sega Sammy Creation Inc. has entered into a definitive agreement to acquire GAN Limited — a B2B technology provider and solutions company.
The deal, which will bolster Sega Sammy’s gaming portfolio, is valued at $107.6 million.
"Market share concentration in the U.S. B2C space, a slower than expected adoption of regulated online gaming in the U.S., along with changes to key customer contracts make the near-term operating environment challenging without ample capital resources,” said interim GAN CEO Seamus McGill in a statement. “Sega Sammy has those resources and GAN is a strategic complement to their existing gaming portfolio.”
The deal is subject to GAN shareholder approval and shareholders will decide the fate of the transaction on March 31, 2024, during a special meeting. If approved, the merger is expected to close in Q4 2024 and would see outstanding GAN ordinary shares acquired for $1.97 per share.
Slower profits
Sega Sammy’s acquisition of GAN follows a drop in revenue for GAN earlier this fiscal year. In Q1 2023, the company generated $35.1 million in revenue – a 6% decrease year-over-year. GAN attributed the decline to a drop in contractual revenue rates from its largest B2B customer.
As a result, GAN saw B2B revenue reach $11.3 million in Q1 2023 — a 16% decline. It saw B2C revenue reach $23.9 million during the quarter, down roughly $500,000 compared to Q1 2022.
Despite the decline in revenue, GAN is continuing to expand its reach. In October, the company received regulatory approval from the Nevada Gaming Commission to bring its sports betting platform to one of the largest gaming markets in the world. A presence in Nevada would build on GAN’s sports betting operations in America, which include providing technology for Wynn Resorts’ Encore Boston Harbor property and the Island Gulf Casino Resort in Mississippi.
GAN also has a presence in sports betting markets throughout Europe and Latin America.
