24. January 2021
NetEnt was founded in 1996 in Sweden and have been at the forefront of providing gambling solutions to casino operators. To see NetEnts pioneering solutions in action, click topnetent-casinos .
Who are Red Tiger?
Red Tiger was established in 2014 as a provider of online casino games. They are well-known for their daily jackpot games. See their games at NetEnt casinos: caltelassn.org
NetEnt's vision is to build the future of online gaming and has invested in infrastructure to increase their customer-base and regulated markets in order to scale their platform.
What does Red Tiger bring to the deal?
By acquiring Red Tiger, NetEnt has the opportunity to make the most of their scalable technology. this will allow NetEnt to provide better value to their casino players.
- NetEnt - established in 1996
- Red Tiger - established in 2014
What was the downside of this merger?
As NetEnt finalised the acquisition with Red Tiger, over 100 NetEnt employees were made redundant. NetEnt stated that this remained in line with their improvement strategy.
After Red Tiger was acquired in September 2019, NetEnt needed to change its business strategy so that the integration with Red Tiger improves all parts of both companies.
Where were these employees retrenched?
NetEnt confirmed that the affected 120 full times roles had to be cut from their global head office in Stockholm in Sweden and also their office in Malta.
Did NetEnt save anything with this merger?
NetEnt gauged that this merger will help save the company's cash-flow about SEK150 million in the second part of 2020. Expressed annually, this translates into SEK250 million in synergies.
- NetEnt to pay an initial £197m for 100% shares
- earn out of up to £23m to be paid by 2022
What's in it for Red Tiger?
NetEnt's integration with Red Tiger meant that Red Tiger's sellers are converted to shareholders of NetEnt. There is hoped that the merger will create efficiency in game development operations.
How much will NetEnt have to pay?
An initial £197 million is to be paid for 100% of Red Tiger shares. Depending on Red Tiger's financial performance, another £23 million might be paid in 2022.
Has NetEnt seen any positives so far?
In April 2020, NetEnt reported their revenue increased by 24% year-on-year in Q1 of 2020 to reach about SEK518 million. This can be directly attributed to the Red Tiger merger.
The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) went up to SEK229 million in the first quarter. The SEK26 million restructuring costs were factored in.
What about company debt?
NetEnt aimed for a rights issue be the end of April 2020. This is predicted to decrease NetEnt's net company debt by about SEK100 million. This did not influence cash-flow.
Furthermore, NetEnt agreed that COVID19 effect are not easy to forecast. They have declared that the company's operations has not been negatively impacted by the Corona pandemic.
- Debt decreased
- COVID-19 not yet affecting
- Revenues in line with market expectations
NetEnt further stated that for gaming companies to mitigate the effects of the pandemic, they need to focus on having a diverse product portfolio and a strong financial footing.
What is the summary?
NetEnt, how listed on the Stockholm Stock Exchange in 2009, entered into their first merger ever when they acquired Red Tiger Gaming, who are known as a slot game specialist.
This merger already started paying off in 2019 when NetEnt saw their revenue grow marginally as the merger helped with the challenges that the Norwegian and Swedish markets presented.
The following phase of the merger integration with Red Tiger can see that the capabilities of both companies can create efficiencies and bolster NetEnts position in online gambling.