The group tabled a bid worth $2.21 billion and said in a
statement that its objective was to become “the world leader in the
online gaming industry.” Analysts described the deal as a
“game-changer”.
However, there may be an unexpected hurdle in Evolution
Gaming’s bid for NetEnt. It was announced recently that the UK’s
Competition and Markets Authority (CMA), is set to investigate the
proposed acquisition. It is said that the CMA is concerned that the
merger between the two giants could reduce competition in the UK’s
internet gaming market.
Things have changed over the last 20 years, when there
were only 4 main game providers and now there are over 200. It is
the responsibility of the CMA and other regulatory bodies to make
sure that a balance is maintained in the competitive industry and
that competition is not challenged by mergers & acquisitions.
On September
22nd, the CMA opened its inquiry into the acquisition bid and gave
interested parties time to comment on the proposed deal. After
studying the feedback, the authority will move onto the next phase
of its investigation by November 16th.
Acceptance Period Extended as Result of CMA
Investigation
As a result of the pending investigation, Evolution
extended the period for NetEnt shareholders to accept its
acquisition offer until November 20th. This is in order to allow
the investigation process to continue unhampered. The acceptance
period for the offer was initially due to expire on October 30th,
and the deal was to be finalized by November 2nd.
If all goes well and the CMA approves the deal, the
settlement of the contract is expected to begin on December
1st.
The deal already has the blessing of Malta’s
Competition and Consumer Affairs Authority.
The Board of
Evolution Gaming issued a statement saying: “As a result of the
timing for the CMA process, the board of directors of Evolution has
resolved to extend the acceptance period for the offer up to and
including 20 November 2020,” the Evolution board said. Other than
the extension of the acceptance period, the terms and conditions of
the offer remain unchanged.”
Evolution, NetEnt Shares Dip
After the CMA announced its decision to open an
investigation into the deal, shares for Evolution dropped from SEK
595.40 to SEK 567.20, however they recovered and traded at SEK
50.20 by the end of the day.
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NetEnt started its week with shares trading at SEK
76.50, but they also saw prices dipping to SEK 74.00
Analysts believe that the CMA will give their final
blessing to the deal, and are not too concerned about the stock
prices slipping.
When Evolution made the offer to purchase NetEnt, the
group said that shareholders holding 20% of NetEnt shares indicated
that they’d be willing to accept the offer. In addition, NetEnt’s
Board of Directors unanimously recommended that their shareholders
back the bid.
Greater Exposure to US Market
The offer was welcomed by NetEnt’s chairman Mathias
Hedlund, who said that the combination of NetEnt’s expertise in
online slots, with Evolution’s iconic live casino brand would give
the two greater exposure in expanding markets, especially in the
United States.
According to
FinsMes: “The combined product portfolio will include Live Casino
and online slots games and generate revenue upsides through
cross-selling and improved distribution via both companies’
customer bases, with closer customer partnerships and additional
geographical spread of the companies’ products as result. The joint
company will grow internationally, both organically and through
additional acquisitions.”
NetEnt was launched in 1996. The digital entertainment
company develops games and system solutions for gaming operators.
It trades on Nasdaq Stockholm and employs over 1,000 people from
all over the world, including Malta, Stockholm, Sofia, Gibraltar,
Kiev, Krakow and New Jersey.
Evolution was launched a decade later and is led by
Jens von Bar. The group develops, produces, markets and licenses
Live Casino solutions to international gaming operators. Evolution
has grown into a B2B provider and boasts 300 satisfied customers
around the world. Evolution is a bigger company than NetEnt,
employing over 8,000 people in studios across North America and
Europe. Evolution, too, trades on Nasdaq Stockholm.
The post CMA is Thinking Twice About Evolution Gaming’s NetEnt
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