Sega Sammy will acquire GAN for $107.6 million.

Last Updated: 13. November 2023By

Investors who have already bought shares of a target company prior to an acquisition can make quick money. This is evidenced by a takeover agreement announced last week that Japanese video game giant Sega Sammy Holdings signed with US casino software developer GAN.

On November 8, 2023, the day after the announcement of the acquisition agreement, the GAN share price on the US technology stock exchange Nasdaq skyrocketed by an incredible 82.7% within one day.

According to the acquisition agreement, Sega Sammy Holdings Inc. through its 100% subsidiary Sega Sammy Creation Inc. offers GAN shareholders 1.97 USD for each share in cash. The offer includes an acquisition premium of a whopping 121% compared to the GAN price from November 7, 2023, the last trading day before announcement of the agreement.

With almost 45 million outstanding GAN shares, Sega Sammy’s offer values the casino software developer, including debt, at approximately 107.6 million USD (approximately 100.8 million euros). Before I discuss further details of the acquisition agreement, I would like to introduce you to the companies involved in the acquisition deal.

The Companies in Brief GAN Limited was founded in 1999 and is based in Irvine, California (Greater Los Angeles area). The company offers business customers worldwide software solutions for online casino games and sports betting. Private individuals can play online sports betting, casino and poker games on the GAN website

The approximately 700 GAN employees generated a turnover of 141.5 million USD in 2022. The operating profit (EBIT) was -24.7 million USD.

Sega Sammy Holdings Inc. has its headquarters in Tokyo, Japan. The company was created in 2004 through a merger between Sammy and Sega to form Sega Sammy Holding. The holding consists of three business areas.

In the “Entertainment” segment, the company offers computer and online games, toys and gambling. In the “Pachislot and Pachinko Machines” segment, Sega Sammy develops, produces and distributes the eponymous gambling devices, which are very popular in Japan. In the “Resort Business” segment, the company develops and operates various hotels.

The holding includes 43 companies in Japan and 40 companies outside Japan. The 10,000 employees of Sega Sammy Holdings worldwide generated a turnover of 431.5 billion Japanese yen (JPY – equivalent to approximately 2.67 billion euros) in the 2022 financial year, which ended on March 31, 2023. The EBIT was 47.4 billion JPY (290 million euros).

Sega Sammy Holdings to Expand Portfolio and Reach Through the acquisition of GAN, Sega Sammy wants to expand its range of gambling and gain a larger share of the rapidly expanding US gambling market. This is emphasized by the Japanese gambling conglomerate in its press release:

„We have decided to go ahead with this acquisition because it is in line with our growth strategy and we are convinced that it will significantly contribute to the expansion of our gambling business and our gambling portfolio.“

This is how the market reacted As already mentioned, the GAN share price jumped 82.7% to 1.63 USD the day after the announcement of the takeover. However, it remained slightly below the 1.97 USD offered by Sega Sammy Holding.

The share price of Sega Sammy Holding, however, lost ground on November 8, 2023. It fell by 3.7% to 2,424.50 JPY on Wednesday last week. Apparently, the investors believe that Sega Sammy is paying too much for the US gambling provider.

This is how it will continue The acquisition is subject to the approval of the GAN shareholders, which is expected to be completed by March 2024 at the latest. In addition, the relevant supervisory authorities must also give the green light for the deal.

If the business receives all the required approvals, Sega Sammy expects to complete the acquisition by the end of 2024.