The listed casino game maker Netent announced yesterday that it will take over Red Tiger Gaming. Red Tiger Gaming was founded in 2014 and is best known for online slots such as Dragon’s Luck and Tiki Fruits.
Barely five years after its establishment, the company has more than 170 employees and branches in Malta, the Isle of Man and in Bulgaria.
This year, Red Tiger expects an EBITDA (profit before interest, tax and depreciation) of approximately € 19.8 million.
On its own website, the company introduces itself as follows:
"We live and breathe casino slots. Our growing band of mathematicians, graphic designers, software developers, audio engineers, gambling experts, QAs, account managers and secret magicians are entirely dedicated to continuously improving the player experience. We call it the science of fun! "
Two weeks ago, Red Tiger launched its hundredth slot machine: Pirates ’Plenty – Battle For Gold.
Gold for the shareholders
And the shareholders now have gold.
Netent immediately pays € 220 million in cash for Red Tiger. In addition, an earn-out of up to € 25 million can be added, depending on the performance of Red Tiger over the next two years.
Therese Hillman, CEO of Netent, explains the acquisition:
"I am very pleased to welcome Red Tiger to the Netent Group. The acquisition combines two leading and innovative companies in the online gaming industry.
We look forward to working with the fantastic Red Tiger team to expand our global reach and to offer more value to operators and players. The transaction will generate significant synergy in our markets worldwide. "
Substantial acquisition sum
Including the earn-out, Netent pays EBITDA 12 times for Red Tiger. That is a very substantial acquisition sum.
Still the deal seems like a good idea. Netent was once the undisputed market leader in online slots. Every quarter the company set new records in terms of turnover and profit. But that time is over.
In recent years, Netent has been chased in popularity by younger game suppliers such as Big Time Gaming, Play'n Go and also Red Tiger.
In response, Netent released more and more new slots at an increasing pace, but most of them flopped miserably.
The Swedish company is also no longer a stock exchange favorite. In 2016, a Netent share cost more than 90 Swedish Krona, but since then the price has fallen into a dive and the share lost three-quarters of its value.
Now Netent chooses not to compete against the rocks with the new game makers, but simply to take over.
Investors also find a logical choice. Yesterday the Netent share was almost 15 percent.
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