NetEnt to buy Red Tiger for a max £223m enterprise value

NetEnt has signed an agreement to purchase Red Tiger Gaming Ltd in an all-cash deal with an initial enterprise value of £200m (approximately €222m) plus a possible additional amount of £23m (approximately €25m) in 2022, according to a press statement sent to Business Malta. The acquisition is financed primarily through new debt facilities provided by Danske Bank and Nordea.

NetEnt is paying an initial consideration of approximately £197m (approximately €219m) for 100% of the shares of Red Tiger. In addition to the initial purchase consideration, a remaining amount of maximum £23m (approximately €25m) may become payable in 2022 on an earn-out basis, subject to Red Tiger’s financial performance over the coming two years, according to the press statement.

This implies a maximum enterprise value of £223m (approximately €248m), corresponding to an enterprise value multiple of approximately 12 times current year EBITDA. NetEnt’s income for the third quarter of 2019 will include approximately SEK 55m (approximately €5.1m) of transaction- and financing-related costs.

The transaction will be completed imminently and is expected to be accretive to NetEnt’s EPS in 2020. Lazard has acted as financial advisor and Cirio Advokatbyrå has acted as legal advisor to NetEnt in connection with the transaction.

Established in 2014, Red Tiger is an online supplier of casino games and software, employing a staff of 170 with operations in Malta, Isle of Man and Bulgaria. Red Tiger’s earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to reach £18m for the full year 2019.

Over the last several years, NetEnt has invested in a global infrastructure focusing on customer reach and regulated markets, supporting a platform for scale. The acquisition of Red Tiger is expected to give NetEnt the opportunity to capitalise on its scalable technology to support future growth.

“I am very pleased to welcome Red Tiger into the NetEnt Group. The acquisition combines two of the leading and most innovative companies in the online gaming industry. We look forward to working with Red Tiger’s fantastic team to enhance our combined global reach and to offer further value to operators and players. The transaction will provide significant revenue synergies across our markets worldwide,” said Therese Hillman, Group CEO of NetEnt.

“This is an exciting new stage of the Red Tiger story and we are delighted to become part of the NetEnt Group. Accessing NetEnt’s unparalleled distribution network and geographic footprint will unlock new opportunities for Red Tiger and will further accelerate our growth. At Red Tiger, we will remain focused as always on driving further innovation and we are looking forward to working with NetEnt on how to leverage our combined capabilities to create new products that wow our customers,” said Gavin Hamilton, CEO of Red Tiger.