VGW founder Laurence Escalante is preparing to take full control of the company in a deal that values the world’s largest sweepstakes casino operator at roughly $2 billion.
On Monday, VGW announced a Scheme Implementation Deed with Ocean BidCo Limited, an unlisted special purpose company created by the family office of Escalante. The deed provides Escalante with the remaining 30% of VGW as the founder currently holds a 70% stake in the company.
Escalante first approached VGW’s board about a potential transaction in November 2024. The board established an Independent Board Committee (IBC) comprised of financial and legal advisors to evaluate the potential sale of all VGW shares to Escalante.
The special purpose company, established by Lance East Office, submitted a non-binding proposal to acquire full control of VGW for a cash consideration of between $2.26 and $2.58 per share.
The board committee rejected the proposal, determining that the cash consideration undervalued VGW. The refusal of the board committee to accept the proposal sparked a series of negotiations with Lance East Office. The contentious negotiations led Lance East Office to increase its proposed share price to $3.26 per share.
During negotiations, minority shareholders raise concerns regarding transparency, leading Escalante to respond to the concerns with a profanity-laced tirade in a private group chat.
The Scheme Implementation Deed provides minority shareholders in VGW with the opportunity to receive cash, to continue their investment in VGW or both. Minority shareholders are entitled to receive a total cash consideration of $3.26 per share with continued investments having the potential of capital gains tax rollover relief.
A sale to Escalante is subject to approval by VGW shareholders. A deal to transfer full ownership to the company’s founder must have its conditions satisfied by Sept. 15.
“The VGW Independent Directors believe the offer price recognizes the value of VGW’s business, after taking into account its medium and longer-term potential and the ongoing risks relating to VGW’s business and operating environment,” said IBC Chairman Mike Symons.
The gaming landscape for VGW is changing as the company faces regulatory scrutiny.
VGW responds to state gaming regulators
Last week, VGW announced the shuttering of its online sweepstakes offerings in New York. VGW plans to shutter its sweepstakes offerings in the Empire State by August as it phases out its Sweep Coins. The termination of sweepstakes offerings does not impact VGW’s social gaming options, which use a different digital currency offered by the operator.
Last October, VGW exited Connecticut after receiving a cease and desist letter from the state’s Department of Consumer Protection. VGW also made changes to its offerings in Nevada with the company shuttering operations of its Global Poker brand in the state.
VGW exited Delaware in April after the state’s Division of Gaming Enforcement conducted an investigation and concluded it believed VGW’s sweepstakes operations violated state gaming laws.
The sweepstakes giant may undergo ownership changes as it advocates for social gaming.
Last month, the company teamed up with PLAYSTUDIOS, Yellow Social Interactive, ARB Interactive and B-Two Operations to establish the Social Gaming Leadership Alliance. The group plans to establish a presence in gaming by engaging with legislators, regulators, media and the public.
