Strategic Move Amid Competitive Market
Late Sunday, Aristocrat Leisure announced its deal to purchase NeoGames, an operator of internet lottery games in the US, Canada, and beyond. The agreement values NeoGames at $29.50 per share, marking a considerable 104% premium to the stock’s average closing price over the three months leading up to May 12.
The acquisition’s conclusion is projected within a year, hinging on standard closing conditions, including regulatory approvals and the nod of NeoGames’ shareholders. According to a press release, shareholders who control approximately 61% of NeoGames’ outstanding shares have committed their support for the transaction.
Upon sealing the deal, NeoGames will transform into a wholly-owned subsidiary of Aristocrat Leisure, after its board of directors unanimously approved the takeover.
Potential Boost for iGaming and Online Lottery
The move is a strategic one for Aristocrat. The company is carving a new path to expand its iGaming and online lottery portfolio, following the 2022 collapse of its attempted Playtech acquisition. The earlier acquisition of Aspire Global by NeoGames, a B2B tech solution provider for online sports betting and casino operators, could provide Aristocrat with a significant advantage, potentially boosting its influence in the industry.
Stifel analyst Jeffrey Stantial commented on the situation, stating, “While we remain believers in the long-term high-quality iLottery opportunity, the likely gradual rollout across the U.S. coupled with a difficult macro environment for illiquid stocks presented a challenging outlook for near-to-medium-term price discovery.”
Implications for the iGaming Landscape
The Aristocrat-NeoGames transaction could significantly shift the iGaming industry. iLottery, a component of the broader iGaming sector, started slower than online sports betting, yet it still holds a promising growth trajectory.
Aristocrat’s acquisition of NeoGames could send a positive signal to other companies in the iGaming space, like International Game Technology (IGT). This strategic acquisition provides Aristocrat with more resources to compete more effectively with US-centric rivals, such as IGT and Light & Wonder, setting the stage for potential success in the fast-paced iGaming landscape.