Evolution bolsters slots portfolio with €450m Big Time Gaming purchase
Live casino heavyweight inks cash plus earn out deal for Sydney-based Megaways developer
Evolution has sealed a €450m (£389.1m) deal to acquire online slots developer Big Time Gaming.
The live casino provider will pay an upfront consideration of €220m (£190.2m) for Big Time Gaming, which is responsible for the development of the highly popular Megaways game mechanic and titles including Bonanza, Extra Chilli and Monopoly Megaways.
Of the upfront amount, €80m will be paid in cash on completion of the deal, with the remainder paid out in newly issued Evolution shares.
The Evolution shares will be valued at a price equivalent to the volume weighted average of Evolution’s share price on Nasdaq Stockholm between 23 March and 7 April, with 1.1 million shares expected to be issued.
In addition, Evolution will pay earn outs based on Big Time Gaming’s EBITDA over the next two financial years, with payments to be made in 2023 and 2024 respectively, amounting to €230m.
As with the upfront cost, the earn-out consideration will be paid 70% in cash and 30% in newly issued Evolution shares.
In 2020, Big Time Gaming generated revenue amounting to €33m with an EBITDA of €29m.
“With the addition of Big Time Gaming to our portfolio of slot brands, we strengthen our strategic position as the leading provider of digital casino games in the world,” said Evolution chairman Jens von Bahr.
“Big Time’s focus on innovation and creating unique playing experiences is a great fit with our culture and mindset at Evolution. We look forward to continuing our journey together,” von Bahr added.
Big Time Gaming CEO Nik Robinson commented: “Evolution and Big Time Gaming are both driven by innovation, hence the perfect match. A bright and entertaining future waits for our players.”
The deal marks Evolution’s first M&A foray since its multi-billion-pound takeover of Swedish slots supplier NetEnt, which completed in December 2020.
That deal has led to significant changes in the NetEnt business, including the closure of the NetEnt live casino brand and the implementation of a new-look slots development roadmap.
Wiggin and Oakvale Capital LLP served as advisers to both firms during the transaction.
Reflecting on the €450m deal, Regulus Partners analyst Paul Leyland said: “Perhaps the most remarkable point about the deal is that BGT generated its €29m of EBITDA in 2020 from just €33m of revenue: achieving margins of 88%.
“What Evolution has bought therefore is a winning formula supported by an all-in expensed cost-base of just €4m: pointing to a relatively small team of developers. While BGT’s growth has been explosive and its market positioning extremely successful, sustainability and future development are more open questions.
“Nevertheless, if NetEnt represented highly invested but clunky legacy and RedTiger its more versatile mobile version, BGT offers turbocharged and differentiated growth,” Leyland added.