DEFA14A: Galaxy Gaming Amends Proxy Statement Following Stockholder Litigation Over Proposed Merger with Evolution

Galaxy Gaming supplements its definitive proxy statement related to the proposed merger with Evolution Malta Holding Limited to address stockholder litigation alleging incomplete disclosures.

Summary

• Galaxy Gaming has amended its definitive proxy statement regarding the proposed merger with Evolution Malta Holding Limited following demand letters and complaints from stockholders.
• The stockholders allege that the initial proxy statement omitted material information, particularly concerning financial projections and analyses by Macquarie Capital.
• To avoid potential delays and minimize costs, Galaxy Gaming is providing supplemental disclosures without admitting any liability or the necessity of such disclosures.
• The supplemental information includes revisions to the 'Background of the Merger,' 'Summary of Financial Analysis of Macquarie Capital,' and 'Certain Unaudited Prospective Financial Information' sections of the proxy statement.
• The special meeting of the Company's stockholders to vote on the merger is scheduled for November 12, 2024.

Sentiment

Score: 5

Explanation: The sentiment is neutral. The document primarily addresses legal and procedural aspects of a merger, with no strong positive or negative indicators. The need for supplemental disclosures due to litigation introduces a slightly negative element, but the company is taking steps to address the concerns.

Positives

• The company is proactively addressing stockholder concerns to avoid delays in the merger process.
• The supplemental disclosures provide additional transparency regarding the financial analysis and background of the merger.
• The company's management believes that the allegations in the demands are without merit.

Negatives

• Stockholder litigation indicates potential dissatisfaction with the initial disclosures regarding the merger.
• The need for supplemental disclosures suggests possible deficiencies in the original proxy statement, even if the company denies any wrongdoing.
• The litigation could potentially delay or adversely affect the merger, although the company is trying to mitigate this risk.

Risks

• The risk that the proposed Merger disrupts the Company's current plans and operations or diverts the attention of the Company's management or employees from ongoing business operations.
• The risk of potential difficulties with the Company's ability to retain and hire key personnel and maintain relationships with customers and other third parties as a result of the proposed Merger.
• The risk that the proposed Merger may involve unexpected costs and/or unknown or inestimable liabilities.
• The risk that the Company's business may suffer as a result of uncertainty surrounding the proposed Merger.
• The risk that stockholder litigation in connection with the proposed Merger may affect the timing or occurrence of the proposed Merger or result in significant costs of defense, indemnification and liability.
• The ability to complete the proposed Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approval and satisfaction of other closing conditions to consummate the proposed Merger.

Future Outlook

The company provides unaudited prospective financial information for the second half of fiscal year 2024 through 2029, indicating expected growth in revenue and profitability.

Industry Context

The document relates to the gaming industry, specifically a merger transaction. The financial analysis includes comparisons to other companies in the gaming sector, such as Inspired Entertainment Inc., Ainsworth Game Technology Limited, and Everi Holdings Inc.

Comparison to Industry Standards

• The document compares Galaxy Gaming's financial metrics to those of Inspired Entertainment Inc., Ainsworth Game Technology Limited, and Everi Holdings Inc.
• The Enterprise Value / LTM Adj. EBITDA multiples for these companies range from 4.3x to 5.8x, with a median of 5.2x.
• The Enterprise Value / LTM Adj. EBITDA less CapEx multiples range from 7.7x to 28.5x, with a median of 11.3x.
• The document also references precedent transactions, including Everi Holdings Inc.'s acquisition by International Game Technology PLC and PlayAGS, Inc.'s acquisition by Brightstar Capital Partners.
• The median Enterprise Value / LTM Adj. EBITDA multiple for these transactions is 6.2x, and the median Enterprise Value / LTM Adj. EBITDA less CapEx multiple is 10.1x.

Legal Proceedings

• Six purported stockholders of Galaxy have sent demand letters to the Company.
• Two purported stockholders have sent an unfiled complaint.
• Two purported stockholders of Galaxy have filed complaints in New York state court.
• The demand letters and complaints allege that the Definitive Proxy Statement is materially incomplete and misleading because it omitted certain information related to the Merger, including but not limited to information about the Company's financial projections and analyses performed by Galaxy's financial advisor, Macquarie Capital (USA) Inc. (Macquarie Capital).

Stakeholder Impact

• The merger will result in Galaxy Gaming becoming a wholly-owned subsidiary of Evolution Malta Holding Limited, impacting shareholders.
• The merger could potentially affect employees, customers, and other third parties, although the company is taking steps to maintain relationships.
• The outcome of the stockholder litigation could impact the timing and terms of the merger, affecting shareholder value.

Next Steps

• The special meeting of stockholders will be held on November 12, 2024, to vote on the merger agreement.
• The company will continue to address any further stockholder demands or complaints that may arise.

Key Dates

Keywords

Merger, Galaxy Gaming, Evolution Malta Holding Limited, Proxy Statement, Stockholder Litigation, Macquarie Capital, Financial Projections, Acquisition