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UK – Inspired to buy Novomatic’s UK amusements divisions for US$120m

By - 11 June 2019

Inspired Entertainment is buying the Gaming Technology Group of Novomatic for US$120m in a deal that includes Gamestec Leisure, Playnation, Astra Games, Bell-Fruit, Harlequin Gaming and Innov8 Gaming but does not include Novomatic’s casino assets.

Following the transaction, Inspired would be positioned to supply an extensive range of products and services across the UK and Europe, as well as managing more than 75,000 gaming machines in the UK and Europe.

Lorne Weil, Executive Chairman of Inspired Entertainment, said: “The potential acquisition of NTG is transformational for Inspired, enabling us to dramatically increase the size, scale and scope of our business by combining our highly complementary, but largely non-overlapping, businesses. We expect to leverage our superior game content, technology, operational capabilities and respective footprints to augment the existing growth trends for our enterprise.”

Gamestec Leisure primarily serves the UK pub sector through the placement of gaming machines on a managed service basis and delivering service support to the bingo and self service betting terminals sectors. Playnation serves the UK holiday and leisure industry, including holiday parks, motorway service stations, bowling alleys, airports and independent holiday resorts through revenue share arrangements with operators. Astra Games is gaming machine manufacturer, selling Category B, C and D gaming machines to pubs, adult gaming centers, and holiday resorts. Bell-Fruit Group primarily sells Category C machines, both analog and digital, and exporting machines to key European geographies. Harlequin Gaming is a game development studio for Astra and Bell-Fruit. Innov8 Gaming is a gaming machine developer supplying Category B3 and C gaming machines within the NTG and to external customers.

Mr. Weil continued: “Inspired and NTG currently operate in different segments but have much in common in terms of providing resources for our customers and their consumers. This combination would provide additional resources for our core businesses and combine the great content and machine portfolio from each. We expect to be able to deliver meaningful value to our shareholders as the acquisition is integrated.”

Inspired expects to achieve $12.3m to $13.3m of synergies through shared costs and increased scale. Inspired also expects to be able to make efficient use of shared manufacturing, engineering, software development, field maintenance and customer service to drive growth and cost savings after the transaction closes. Inspired further expects to reduce capital deployed in the pub gaming sector following the closing of the transaction, as the sector continues its ongoing digital transformation.

Inspired plans to draw on the core strengths of Inspired and NTG to broaden offerings, bring differentiated gaming products to new sectors and geographies, accelerate key growth initiatives and offer enhanced capabilities, systems, field service and content. The addition of NTG is expected to help diversify Inspired’s UK business and expand into contiguous customer segments with very little overlap of existing customers. Inspired’s position and expertise in server based gaming is expected to accelerate NTG’s development initiatives to transition the pub gaming sector from analog to digital gaming machines.

“The proposed financing is at a lower interest rate than our existing debt and is a major step in improving Inspired’s capital structure,” said Stewart Baker, Executive Vice President and Chief Financial Officer of Inspired. “Pro forma for the acquisition, adjusting for the mid-point of estimated run-rate annual synergies, the proposed financing implies net leverage of 3.0x[3]. It will position us with a stronger balance sheet and extended maturities, while also reducing our cost of capital which we believe will allow us to have more flexibility to capitalise on meaningful opportunities to grow our business.”

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