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Aristocrat edges closer to NeoGames acquisition

| By Robert Fletcher
Aristocrat Leisure says it could complete its pending acquisition of NeoGames by next week after confirming it has secured all necessary gaming regulatory approvals for the deal.
PlayAGS Brightstar Capital

In May last year, Aristocrat agreed to purchase NeoGames for $1.20bn (£965.3m/€1.13bn). At the time, Aristocrat said it hoped to complete the acquisition within 12 months. 

This target looks set to be hit, with all pre-approvals for the deal either being received or waived. Aristocrat also says it has secured all antitrust and foreign investment regulatory clearances in relation to the purchase.

As such, only a few steps remain before the acquisition can go through. One of these includes approval from NeoGames, with a vote set to take place on or around 26 April.

Aristocrat says should shareholders vote in favour of the deal as expected, it will complete the acquisition on the same day as the vote. This means that by this time next week, the deal will likely have been finalised.

Why is Aristocrat acquiring NeoGames?

If the deal proceeds, NeoGames will transfer its statutory seat, registered office and seat of central administration from Luxembourg to the Cayman Islands. An Aristocrat subsidiary will merge with NeoGames, with the latter being the surviving company and becoming a subsidiary of Aristocrat.

Speaking at the time of the original announcement last year, Aristocrat CEO and managing director Trevor Croker noted “great opportunities” from the combination. He referenced clear revenue and growth potential as a result of the purchase.

“This proposed acquisition builds on the strength and resilience of our business, expands market opportunities and adds capabilities to unlock our full potential,” Croker said in May 2023. “We remain focused on executing our proven growth strategy and creating long-term value for Aristocrat shareholders.”

NeoGames chair John E Taylor Jr also backed the deal. He said it provides “compelling” value for NeoGames shareholders and that they should support the motion.

Net loss flat for NeoGames in 2023

In its final full year ahead of the expected acquisition, NeoGames reported a 21.1% rise in revenue to $254.4m. The results were published in early March, with NeoGames opting not to hold an earnings call due to the pending acquisition.

Revenue for NeoGames’ ilottery segment hit $57.0m for 2023, moving up slightly by 1.2%. The company’s igaming revenue also rose, levelling off at $134.6m, an increase of 10.2%.

However, expenses generated throughout the year more than wiped out the revenue, coming to $218.2m. Net loss totalled at $18.2m for 2023, just 3.6% less than the $18.9m recorded in full-year 2022. 

Adjusted EBITDA for the year doubled to $66.5m.

Strategic investments drive revenue up at Aristocrat

As for Aristocrat, which operates on a different financial year than NeoGames, the group posted its FY23 results in November.

Aristocrat said that its ongoing strategic investment and diversification plans helped push revenue up 13.0% to AU$6.30bn. These include Roxor Gaming in January 2023, which led to the wider development of the Anaxi online arm.

The Pixel United social games business represented $2.65bn, or 42.1%, of all revenue in the year. Gaming revenue, derived from contracts with customers in the Americas, was 14.0% higher at $1.85bn.

Meanwhile, Class III outright sales and other gaming revenue, derived from contracts with customers across the Americas, Australia and New Zealand and International segments, jumped 32.0% to $1.80bn.

Net profit in 2023 hit $1.48bn, down 4.8% from the previous year. However, the 2022 figures included a $592.2m positive hit from foreign exchange, skewing year-on-year comparisons.

Net profit after tax and before amortisation of acquired intangibles was up 46.7% at $1.54bn. In addition, normalised EBITDA amounted to $2.11bn, a rise of 33.2%.

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