Austrian slot giant Novomatic is buying Len Ainsworth’s majority shareholding in Ainsworth Game Technology (AGT), equating to 53 per cent of the Australian slot manufacturer.
Mr Ainsworth, Founder of the company that bears his name, will remain as Chairperson. Novomatic said it isn’t looking to complete a takeover and has stressed that it supports AGT’s strategy to build a larger, diversified and more profitable international game technology company. Novomatic plans to provide significant game development and other intellectual property to AGT and work with AGT on a global distribution and marketing strategy after completion.
Len Ainsworth, Executive Chairman, said: “I’m pleased Novomatic, in agreeing to acquire my shareholding, has committed to Ainsworth and our international growth strategy. Novomatic is an impressive and highly respected market leader in our industry. It has a clear commitment to innovation and new product development, which aligns with AGT. With its strength and support, Ainsworth’s future is assured and our potential is increased. On behalf of the Board, management and employees I look forward to welcoming Novomatic to AGT and to working together to deliver our potential.”
Professor Graf, Founder of Novomatic, added: “Ainsworth is iconic and we are delighted to become substantial shareholders in the company (if shareholder approval is granted). We support the Board and management’s strategy and look forward to assisting the Company as it continues to successfully build its international footprint and profile.”
Novomatic has also agreed to maintain AGT’s listing on ASX as well as having its current board and executive management teams stay in place.
Novomatic sees the deal as an opportunity to strengthen its market position in Australasia and the USA. Indeed the Americas, now represents 58 per cent or A$34.8m of Ainsworth’s total segment profit.
Novomatic CEO Harald Neumann said: “Through the planned share acquisition from Len Ainsworth, one of the top players in Australasia and in the USA, we will not only increase our market share in those continents, but will be consistently continuing our international growth strategy. The synergy transfer of know-how, contents, high-tech gaming equipment will allow us to further increase our potential in the worldwide gaming market.”
Mr Ainsworth, a 92-year-old gaming veteran and philanthropist, has already given away over A$30m to medical research, including a donation to the redevelopment of Sydney’s St Vincent’s Private Hospital. He revealed that more would be handed over to health research.
He is believed to have an estimated wealth of $1.82bn according to the BRW 2015 Rich List.
A statement from Ainsworth added: “AGT is excited by this prospect and will work with Novomatic on the details and execution in the coming months. Mr Ainsworth agreed to sell his 172.1m ordinary shares at $2.75 per share for cash consideration, subject to regulatory and licence approvals. As Novomatic will own approximately 53 per cent of AGT’s issued capital upon completion of the sale, the sale is subject to shareholder approval. The board of AGT supports the transaction and will convene an extraordinary general meeting of AGT shareholders to seek the necessary approval (EGM). The Board of AGT will prepare a notice of meeting and engage an independent expert. The EGM will be held within three months and further details will be provided to shareholders in due course.”
Not all shareholders in Ainsworth are welcoming the deal. Watermark Funds Management, a shareholder in the company, questioned why Novomatic would want a controlling stake in a company without a full takeover.
Taking to the Sydney Morning Herald, Watermark investment analyst Joshua Ross said: “It looks suspicious that Novomatic want to control Ainsworth but not own 100 per cent. The current offer does not make sense for minority shareholders – it looks to be to their detriment. Novomatic will gain from access to the US, however, the prospect of a takeover from a third party are diminished, and Novomatic is not necessarily aligned with minority shareholders.”
The share deal was revealed along with Ainsworth’s results for the first half of 2016 where revenue of $141.9m, was up 27 per cent. The continued growth in international revenue resulted in a contribution of 65 per cent from these regions of total revenue, compared to 52 per cent in the previous corresponding period.
Of particular interest to Novomatic will be the Americas. Ainsworth now has 1,445 units installed in North America, which contributed $43m in revenue, an increase of 42 per cent on the previous corresponding period. Ainsworth has enjoyed strong performance within California combined with contributions from new markets in Idaho, Louisiana, Kansas, Missouri, Maryland and West Virginia all of which have contributed to the increase in revenue achieved.
Latin America continued its strong performance achieving revenue of $36.9m, an increase of 64 per cent. Unit sales of 1,398 grew by 29 per cent in the period as well as increased revenue contributions from previously placed participation machines operating under revenue sharing models. Units under gaming operation at period end were 1,823, an increase of 71 per cent.
Mexico unit sales increased 42 per cent on the previous corresponding period and contributed 43 per cent of total Latin American unit sales, an increase on the 39 per cent in the previous corresponding period. Continued interest and sales within Argentina, Peru, Colombia and Uruguay represented 39 per cent of Latin American unit sales in the period.