NetEnt agrees £220m acquisition of Red Tiger Gaming

Stockholm-listed casino games developer NetEnt has agreed the first acquisition in its history, with a deal to take control of slot specialist Red Tiger Gaming worth up to £220m (€245.3m/$271.4m).

NetEnt will acquire Red Tiger in an all-cash deal, with an initial enterprise value of approximately £197m, followed by an earn out of up to £23m to be paid by 2022.

“I am very pleased to welcome Red Tiger into the NetEnt Group,” NetEnt chief executive Therese Hillman (pictured) said. “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.”

Founded in 2014 by the team behind Cayetano Gaming, Red Tiger has quickly established itself as a leading supplier in the industry, with its Daily Jackpots feature in particular proving a huge hit with players. The company has approximately 170 employees, with operations in Malta, the Isle of Man and Bulgaria.

Red Tiger chief executive Gavin Hamilton said: “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’ll 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.”

NetEnt will pay an initial £197m for 100% of shares in the business, and a further £23m may be payable in 2022, based on Red Tiger’s financial performance over the coming two years, for a maximum enterprise value of £223m. This represents a multiple of 12 times the supplier’s earnings before interest, taxes, depreciation and amortization (EBITDA) for 2019, which is projected to reach £18m.

As a result of the acquisition, NetEnt said, it would incur approximately SEK55m in transaction- and financing-related costs. The deal is being financed primarily through new debt facilities provided by Danske Bank and Nordea.

Lazard acted as financial advisor to NetEnt in relation to the transaction, with Cirio Advokatbyrå serving as legal advisor.