DEFM14A: Evolution Gaming to Acquire Galaxy Gaming in $8.0 Million Deal

Evolution Malta Holding Limited will acquire Galaxy Gaming, Inc. for $3.20 per share in cash, representing a 124% premium over the closing price on July 17, 2024.

Summary

• Galaxy Gaming, Inc. has entered into a merger agreement with Evolution Malta Holding Limited, a subsidiary of Evolution AB.
• Evolution will acquire Galaxy Gaming for $3.20 per share in cash.
• The merger consideration represents a 124% premium over Galaxy's closing share price of $1.43 on July 17, 2024.
• The transaction is subject to stockholder approval, regulatory approvals, and other customary closing conditions.
• The merger is expected to close in mid-2025.
• Upon completion of the merger, Galaxy Gaming will become a wholly-owned subsidiary of Evolution.
• The board of directors of Galaxy Gaming recommends that stockholders vote in favor of the merger.
• Stockholders who do not vote in favor of the merger and follow specific procedures have the right to seek appraisal of their shares.
• The exchange of shares for cash will be a taxable transaction for U.S. federal income tax purposes.

Sentiment

Score: 8

Explanation: The document is positive due to the high premium offered to Galaxy Gaming stockholders and the board's recommendation to approve the merger. The deal provides certainty of value and is expected to benefit both companies.

Positives

• The merger provides Galaxy Gaming stockholders with a significant premium of 124% over the recent market price.
• The all-cash transaction provides certainty of value for Galaxy stockholders.
• The board of directors of Galaxy Gaming supports the merger and recommends that stockholders vote in favor of the merger.
• The consummation of the Merger is not subject to any financing conditions.

Negatives

• The transaction is subject to regulatory approvals, which could delay or prevent the merger from closing.
• Galaxy Gaming will cease to be a publicly traded company and stockholders will no longer have an ownership interest.
• Galaxy may be required to pay Evolution a termination fee of $2,617,339 under certain circumstances.
• The receipt of cash for Company Shares pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes.

Risks

• The ability to obtain required regulatory approvals could delay or prevent the merger from closing.
• The failure to consummate the merger could negatively impact Galaxy Gaming's stock price and business.
• The restrictions placed on Galaxy's business activities during the pendency of the Merger, pursuant to the Merger Agreement.
• The potential impact of general economic, political and market factors on the parties to the proposed Merger.

Future Outlook

The merger is expected to close in mid-2025, subject to the satisfaction or waiver of all closing conditions.

Management Comments

• On behalf of the Board, I thank you for your support and appreciate your consideration of this matter.
• The Board recommends that Galaxy stockholders vote FOR the Merger Proposal.
• The Board recommends that Galaxy stockholders vote FOR the Merger Compensation Proposal and FOR the Adjournment Proposal.

Industry Context

Evolution's acquisition of Galaxy Gaming reflects a trend of consolidation in the gaming industry, with larger companies seeking to expand their offerings and market reach.

Comparison to Industry Standards

• The 124% premium offered to Galaxy Gaming stockholders is significantly higher than the average premium paid in recent gaming industry acquisitions.
• Comparable companies in the gaming industry, such as Inspired Entertainment and Everi Holdings, have traded at lower multiples of EBITDA than the implied multiple in this transaction.
• The termination fees in the merger agreement are within the range of customary fees for transactions of this size.

Stakeholder Impact

• Shareholders will receive a significant premium for their shares.
• Employees may experience changes in their roles and responsibilities following the merger.
• Customers and suppliers may see changes in the products and services offered by the combined company.

Next Steps

• Galaxy Gaming will hold a special meeting of stockholders on November 12, 2024, to vote on the merger agreement.
• The parties will seek regulatory approvals in various jurisdictions.
• If approved, the merger is expected to close in mid-2025.

Key Dates

Keywords

merger, acquisition, galaxy gaming, evolution gaming, stockholders, regulatory approvals, merger agreement, gaming