Las Vegas Sun

March 28, 2024

Global Cash Access buys Multimedia Games in third slot machine merger in two months

Slot Machines

Steve Marcus

Gamblers try their luck with slot machines during the opening of the casino floor at the Cromwell, formerly Bill’s Gamblin’ Hall & Saloon, on the Las Vegas Strip and Flamingo Avenue, Monday, April 21, 2014.

Global Cash Access, a company that provides casinos with equipment for monetary transactions, announced today that it is purchasing the gaming technology company Multimedia Games for $1.2 billion.

Global Cash Access is paying $36.50 per share, a 31 percent premium over Multimedia Games’ closing stock price on Friday, according to a company statement. The deal, which the companies expect to complete early next year, is the third merger announced in the slot machine industry in just the past two months.

It’s a much smaller deal than the merger announced last month between Scientific Games and Bally Technologies, which was valued at $5.1 billion including debt, as well as the $6.4 billion merger announced in August between Gtech and International Game Technology.

"The acquisition of Multimedia Games represents a gaming-relevant transformational opportunity to combine two companies with rich gaming heritages and uniquely positions GCA as an important strategic partner to gaming operators by offering them deeper and more integrated solutions across their entire gaming floor," said Ram Chary, the president and CEO of Global Cash Access, in the statement.

By Global Cash Access’ estimate, the merger is expected to generate $30 million in cost synergies and $800 million in revenue for the combined company. The merger still requires approval from shareholders and industry regulators.

Todd Eilers, the founder of California-based Eilers Research, said there could be another buyer for Multimedia Games.

In a report published Monday, he pointed out that the fee to breakup the merger is only $11 million through Oct. 8, after which it jumps to $32.5 million.

“We are not surprised to see (Multimedia Games) get acquired as we have been highlighting for quite some time that they were the most attractive target remaining in a consolidating industry,” he wrote. “However, we are surprised that the buyer is GCA quite frankly.”

Eilers suggested that merging with a different company might make more sense. Global Cash Access provides casinos equipment such as ATMs and slot ticket redemption kiosks, while Multimedia Games is mainly a slot machine vendor.

Aside from some basic expense reductions, Eilers wrote that “we struggle to see any strategic benefits from the combination of the two companies.”

Eilers said in a tweet Monday that Gtech-IGT or slot machine manufacturer Aristocrat Technologies “seem like the most likely” alternate buyers.

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