GAN bemoans slow igaming expansion and merges with SEGA Sammy Creation

jigsaw representing acquisition
Image: Shutterstock

GAN has announced it has entered a definitive agreement to be acquired and merged into Sega Sammy Creation Inc, citing the slow growth of online casino markets in the US as a key driver for the deal. 

The terms of the merger deal reveal that SEGA Sammy Creation will pay $1.97 per GAN share, reflecting a 121% premium of its closing price at the end of trading on November 7. 

Interim CEO of GAN, Seamus McGill, stated that this premium, as well as the “slower than expected adoption of regulated online gaming in the US”, was key to accepting this deal with the market offering less growth than it would have anticipated. 

During the summer, GAN lost one of its major US clients when Wynn Resorts announced the closure of most of its online platforms across the US, instead focusing on an omnichannel strategy in states where it has a land-based presence.

McGill commented: “After a thoughtful review of value creation opportunities available to us, we are pleased to have reached this agreement with SSC. Market share concentration in the US B2C space, a slower-than-expected adoption of regulated online gaming in the US, along with changes to key customer contracts make the near-term operating environment challenging without ample capital resources. 

“Sega Sammy has those resources and GAN is a strategic complement to their existing gaming portfolio. We believe this all-cash offer, at a substantial premium to recent trading prices, is the value-maximizing path for our shareholders.”

Closure of the deal is subject to shareholder approval in a vote which will take place before the end of Q1 of 2024. 

The board of directors has recommended that shareholders approve the deal, explaining that the $1.97 per share price represents “fair value” and the deal is “in the best interests of the company and its shareholders.

McGill replaced Dermot Smurfit as CEO of GAN in September after the former chief departed the company with immediate effect. Smurfit remains a significant shareholder in GAN and talks were underway regarding a consultancy role but it is unclear what will happen with this following the takeover.

As well as providing gaming platforms on a B2B basis, GAN also runs B2C gaming operations, amplified by its acquisition of CoolBet in early 2021. However, the operator was one of the first operators to depart the regulated Ontario market and GAN noted that the intense competition and concentration of market share with a select number of operators required more capital to compete with.