Multimedia Games, one of the pioneers of the slot world will be acquired by Global Cash Access (GCA). The latter supports casinos with equipments related to money transactions. The deal is worth a whopping $1.2 billion, as stated by the company in a media statement.
Global Cash Access is buying the shares at $36.50 per unit. The per unit price is a staggering 31% more than what the company’s present share is worth.
The company announced that the deal will be completed sometime in the beginning of the year 2015. This happens to be the third big ticket purchase in the slot industry.
That being said, it is a smaller deal than the previous mergers that took place between Gtech, International Game Technology and Bally Technologies, scientific technologies. Both the mergers were worth $6.4 and $5.1 billion respectively.
The CEO of GCA, Ram Chary, said in a media statement that this merger will transform GCA and the company would be in a better position to offer better solutions to the gaming fraternity. The CEO went on to say that this strategic partnership between the two companies, which has rich heritages, will transform both the companies and help each other to develop better solutions for the gaming floor.
An estimate from the GCA revealed that this merger will help the company earn as much as $800 million yearly revenue and a cost cut of $30 million. The deal, though, still needs approval from the regulators of the industry as well as the shareholder.
Meanwhile, the CEO of Eilers Research has expressed his surprise when the merger was announced. Eilers suggested that there is a possibility that the company might get acquired by a different company. He pointed out that the breakup fee is a mere $11 million, which will only touch $32.5 million post 8 October 2014.
He also mentioned that his company is not at all surprised at the news as Multimedia Games is a very attractive company, which was out there to be acquired in a consolidated industry, but the fact that it has been acquired by a company such as GCA has greatly surprised his company.
Eilers also said that a company such as GCA, which only provides gaming equipments and cash machine will have no strategic benefit by acquiring a company whose core strength is slot manufacturing and designing. However, the only respite for both the companies could be cost cutting.