8-K: Accel Entertainment Expands into Louisiana with Toucan Gaming Acquisition

Accel Entertainment has acquired 85% of Toucan Gaming, a Louisiana-based gaming operator, for approximately $40 million, marking its expansion into the southeastern U.S. market.

Summary

• Accel Entertainment has acquired 85% of the ownership interests of Toucan Gaming and LSM Gaming, both Louisiana-based gaming operators, for around $40 million.
• The combined business will operate as Toucan Gaming in Louisiana and will be led by Stan Guidroz, the current CEO of Toucan Gaming, who retains 15% ownership.
• The acquisition is expected to generate approximately $25 million in revenue and $6 million in Adjusted EBITDA in 2025.
• This deal adds 13 truck stop locations with 450 terminals and 60 3-machine locations with 180 terminals to Accel's portfolio.
• The acquisition aligns with Accel's strategy to expand its presence both organically and through acquisitions in the southeastern U.S. market.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the strategic acquisition, expected revenue and EBITDA growth, and expansion into a new market. The management commentary is also optimistic.

Positives

• The acquisition provides Accel with a strong entry into the southeastern U.S. market.
• Toucan Gaming is a well-established and respected company in Louisiana.
• The deal is expected to be immediately accretive, with projected revenue of $25 million and Adjusted EBITDA of $6 million in 2025.
• The acquisition adds a significant number of gaming terminals and locations to Accel's portfolio.
• The existing management team of Toucan Gaming will continue to lead the business, ensuring a smooth transition.

Negatives

• The document does not explicitly mention any negatives.

Risks

• The integration of Toucan's operations, establishments, and terminals with Accel's may present challenges.
• The integration of new technology and player rewards programs could pose risks.
• There are risks associated with operating in new jurisdictions and maintaining contracts with location partners.
• Unfavorable macroeconomic conditions could negatively impact Accel's business.
• The company is dependent on relationships with key manufacturers and third parties for gaming terminals and related supplies.

Future Outlook

The company anticipates further expansion into the southeastern U.S. market and expects the acquisition to contribute to its growth strategy. The company also plans to leverage the benefits of increased innovation and scale.

Management Comments

• Accel CEO Andy Rubenstein stated that the acquisition of Toucan expands Accel's reach into the attractive southeastern U.S. market.
• Andy Rubenstein believes there is significant untapped demand in the southeastern U.S. market.
• Andy Rubenstein is confident that Toucan is the perfect partner for Accel.
• Stan Guidroz, Owner and CEO of Toucan, said that partnering with Accel will accelerate their growth plans.
• Stan Guidroz looks forward to bolstering Accel's presence in the southeastern U.S. market under the Toucan brand.

Industry Context

This acquisition reflects a trend of consolidation in the distributed gaming industry, with larger operators like Accel seeking to expand their geographic footprint and market share. The move into Louisiana positions Accel to capitalize on the growing demand for gaming in the southeastern U.S.

Comparison to Industry Standards

• Accel's acquisition of Toucan Gaming is similar to other expansions by large distributed gaming operators, such as those by Inspired Entertainment and Scientific Games, who have also grown through strategic acquisitions.
• The expected $6 million in Adjusted EBITDA from the acquisition is a significant addition to Accel's portfolio, and is in line with industry averages for similar sized acquisitions.
• The addition of 630 gaming terminals is a substantial increase for Accel, and is comparable to other large scale expansions in the industry.
• The focus on truck stops and 3-machine locations is a common strategy in the distributed gaming sector, as these locations often provide a steady stream of revenue.

Management Changes

Stakeholder Impact

• Shareholders are likely to view the acquisition positively due to the expected revenue and EBITDA growth.
• Employees of Toucan Gaming will become part of the Accel team.
• Location partners of Toucan Gaming will benefit from the increased scale and resources of Accel.
• Customers of Toucan Gaming will experience an enhanced gaming experience through the partnership with Accel.

Next Steps

• The combined business will operate as Toucan Gaming throughout Louisiana.
• Accel will support Toucan's continued growth under the leadership of Stan Guidroz.
• Accel will integrate Toucan's operations, establishments, and terminals into its existing systems.
• Accel will integrate new technology and player rewards programs into its portfolio.

Key Dates

Keywords

gaming, acquisition, distributed gaming, video poker, Louisiana, Accel Entertainment, Toucan Gaming, route operator, terminals, EBITDA