GAN acquired by Sega Sammy in $107.6m deal
Directors cite slow adoption of igaming in US and lack of available capital as necessitating transaction
Board members at GAN have given their assent to an all-cash sale of the business to video games company Sega Sammy Creation (SSC), in a deal worth $107.6m (£87.7m).
Under the merger agreement, each of GAN’s ordinary shares will be converted into the right to receive $1.97 in cash per share, reflecting a premium of 121% on the closing price of GAN shares on 7 November.
The approval of GAN’s board of directors comes after the formation of a special committee, comprised solely of independent directors, which considered the transaction and negotiated the price.
This committee, which GAN confirmed unanimously approved the deal, asserted that the $1.97 share price “constitutes fair value” and is in the best interests of GAN.
Addressing the approval, GAN chairman and interim CEO Seamus McGill highlighted the challenges of the US market and escalating capital requirements as necessitating the deal.
“After a thoughtful review of value creation opportunities available to us, we are pleased to have reached this agreement with SSC,” McGill said.
“Market share concentration in the US B2C space, a slower than expected adoption of regulated online gaming in the US, along with changes to key customer contracts make the near-term operating environment challenging without ample capital resources.”
The GAN chairman continued: “Sega Sammy has those resources and GAN is a strategic complement to their existing gaming portfolio.
“We believe this all-cash offer, at a substantial premium to recent trading prices, is the value-maximising path for our shareholders,” he added.
GAN initiated a strategic review of its business in April, ostensibly to look for better ways to create value for shareholders, however, the news led to a 24% drop in the firm’s share price, despite CEO Dermot Smurfit insisting there was still “tremendous unrealised value” in the business.
In September, Smurfit resigned as CEO of GAN after 13 years in the role, leading to the appointment of Gill as his interim replacement.
At the time, GAN confirmed it was evaluating indications of interest in its business.
Sega Sammy Creation is a division of Sega Sammy Holdings, a Japanese holding company formed when the Sammy Corporation merged with international video gaming goliath Sega in 2004.
The deal is subject to the approval of GAN shareholders and will see the firm delist from the Nasdaq stock exchange, becoming a wholly owned subsidiary of SSC.
GAN will convene a special general meeting to approve the merger agreement, which will take place no later than 31 March, 2024.
GAN’s share price dropped by just under 1% to $0.89 per share at close yesterday (7 November) on the Nasdaq.