Supplier News
UK- Hydra Industries Acquisition Corp. to buy Inspired
By Phil - 14 July 2016
Hydra Industries Acquisition Corp., a special purpose acquisition company formed for the purpose of effecting a merger, acquisition or similar business combination, has entered into a definitive agreement to acquire Inspired Gaming from funds managed by Vitruvian Partners, a London headquartered private equity firm.
The transaction reflects a valuation for Inspired of £200m, including the company’s indebtedness, but excluding transaction expenses as well as the impact of Hydra’s sponsor shares and subject to certain closing adjustments. Based on the current USD/GBP exchange rate[1] the equivalent transaction value is $264m. Inspired’s fiscal year end September 2016 Revenue and EBITDA are estimated to be $110m and $38m, respectively, with the potential to grow meaningfully, driven by a backlog of recurring revenue contracts.
Consideration paid to the Seller Group for their interests in the Company will consist of cash available at closing after transaction expenses, and Hydra common shares issued at a price of $10.00 per share. The Seller Group may receive additional common shares as further consideration, depending on future performance. The cash component of the transaction will be funded by a $20m private placement from Macquarie Capital in addition to Hydra’s cash in trust, which is currently approximately $80m. Assuming none of Hydra’s shares are redeemed for cash in trust, the Seller Group would retain 35 per cent ownership at closing. Certain liabilities of Inspired, including existing credit facilities, are expected to remain in place at closing.
Upon consummation of the transaction, Hydra’s CEO Lorne Weil will become Executive Chairman while Inspired’s founder and current CEO Luke Alvarez will continue in his leadership role as CEO in addition to being named to the Board of Directors.
Lorne Weil said: “We have been searching for a compelling business that utilizes our skill set to drive growth. We are excited to have the opportunity to partner with Luke and his team as we work together to grow the digital business through increased focus and the deployment of new technology and content.”
Mr. Weil continued: “We look forward to not only growing Inspired’s business, but also using it as a platform for potential opportunistic acquisitions of synergistic businesses across a number of geographies. We believe the combination of Inspired’s management team and our experience in utilizing technology and content to drive revenue growth in gaming markets makes us well-positioned to enhance value for our shareholders.”
Luke Alvarez stated, “We are excited to be partnering with Lorne Weil and Hydra, while continuing our strong relationship with Vitruvian. Lorne’s history in the gaming industry and Hydra’s access to the public capital markets are the perfect combination to take Inspired to the next level. Our ambition with Inspired has always been to build a truly scaled and global leader in gaming technology, which we believe is transitioning rapidly to an all-digital environment. Our visions are aligned, and the Inspired team is looking forward to working with Hydra to drive value through organic and strategic growth.”
Philip Russmeyer, Partner at Vitruvian, said: “We have enjoyed a strong and productive partnership with the management team at Inspired and are delighted to support this transaction, which will facilitate access to capital markets and support the company in the continued build-out of its market-leading positions.”
The proposed transaction has been unanimously approved by the Boards of Directors of both Hydra and Inspired, and is expected to close in October 2016, subject to approval by Hydra’s shareholders, required regulatory approvals and other customary closing conditions.
Immediately after the closing, Hydra intends to change its name to Inspired Entertainment, Inc. and will continue to trade on NASDAQ under the ticker INSE.
