Posted on: October 18, 2021, 09:15h.
Last up to date on: October 18, 2021, 09:15h.
Late Sunday, Australian gaming machine Aristocrat Technologies introduced it’s buying rival Playtech in a $3.71 billion transaction valuing the goal at a 58 p.c premium to the place it closed final Friday. At least one analyst believes the deal highlights potential alternative with gaming know-how supplier GAN Ltd. (NASDAQ:GAN).
Aristocrat’s deal for Playtech highlights gaming tech consolidation. GAN has what patrons are in search of. (Image: Nasdaq)
B. Riley analyst David Bain says the premium Aristocrat is paying to amass Playtech, which has the same enterprise mannequin to GAN, may very well be indicative of valuation alternative with GAN.
We consider the deal additional demonstrates shortage worth of each business-to-business (B2B) know-how and content material, highlighting valuation of GAN and a handful of different B2B/business-to-consumer (B2C) gaming know-how and content material suppliers within the area, which continues to see extraordinarily heavy M&A (mergers and acquisitions) exercise,” stated Bain in a notice to shoppers at present.
The analyst charges GAN “purchase” with a $26 worth goal, implying upside of 71 p.c from the Oct. 15 shut.
GAN Has Scarce Assets
While shares of GAN, which like Playtech makes gaming-related software program that propels iGaming and sports activities wagering platforms, are off 25 p.c year-to-date, the corporate’s technological capabilities stay alluring.
That’s much more true at a time when a lot of the consolidation within the on-line gaming business is revolving round patrons getting their arms on know-how to fortify their in-house tech stacks. That’s precisely what Aristocrat is doing in buying Playtech. The UK-based goal makes software program for web casinos, web-based poker rooms, and on-line sports activities wagering and offers software program for fixed-odds arcade video games and on-line video games.
While GAN isn’t but producing buzz as a possible takeover goal, it’s clear some patrons are pursuing targets for know-how property. There’s hypothesis it’s tech DraftKings (NASDAQ:DKNG) desires in its overtures towards Entain Plc (OTC:GMVHY). As one other instance, Bally’s (NYSE:BALY) latest purchases of Gamesys and Bet.Works affirm gaming operators are eager on vertical integration and need to convey tech in-house to understand price efficiencies.
As for GAN, its market capitalization of about $640 million makes it simply digestible for any variety of suitors, however the Irish firm hasn’t been straight tied to takeover rumors.
Another Reason to Like GAN
There aren’t any ensures {that a} suitor will come calling for GAN, however B. Riley’s Bain says there are different causes to think about the shares, together with a not too long ago introduced take care of Red Rock Resorts (NASDAQ:RRR) the funding neighborhood could also be overlooking.
Last week, GAN stated it inked an accord with the on line casino operator “to construct and deploy the infrastructure for Station’s ‘STN Sports’ on-line sports activities platform, cell functions, and retail Over-the-Counter and Kiosk-based sports activities betting all through Nevada.”
“We consider the settlement validates components of GAN’s Coolbet know-how, which shall be integrated into the a number of components of the deal. Given the RRR settlement was introduced late within the day (Friday), and never mentioned on its Analyst Day name, we consider it might have been neglected by buyers,” stated Bain.
The analyst raises 2022 and 2023 gross sales estimates on GAN to $176.2 million and $225.3 million, respectively, from $159.2 million and $187.3 million.
