NetEnt Snaps Up Red Tiger Gaming in £197m All-Cash Deal

  • First acquisition marks historic moment in NetEnt’s history
  • Total could rise to £220m with earn-out of up to £23m payable in 2022
  • Deal represents a 12x multiple of Red Tiger’s EBITDA for 2019
two men in suits shaking hands
NetEnt has paid an initial fee of £197m to purchase Red Tiger, the first acquisition in the company’s history. [Image: Shutterstock.com]

Nine-figure deal announced

Online casino games developer NetEnt has sent shockwaves through the iGaming industry by announcing its acquisition of Red Tiger Gaming Limited for an initial fee of £197m ($243m).

This eye-watering figure could jump to a maximum of £220m ($271m) in 2022, depending on how Red Tiger performs over the next two years. If the agreed-upon performance targets are met, NetEnt will be writing another cheque for up to £23m ($28m).

eye-watering figure could jump to a maximum of £220m ($271m) in 2022

Significant moment in company’s history

Marking a major milestone in NetEnt’s history, this all-cash deal represents the Stockholm-listed company’s first acquisition since its founding in 1996. Red Tiger expects to earn £18m ($22m) in 2019 before interest, taxes, depreciation, and amortization (EBITDA). This means that the final purchase price paid by NetEnt could correspond to a multiple of twelve times this year’s earnings.  

In a press release announcing the acquisition, NetEnt confirmed that the deal was primarily financed through new arrangements with Danske Bank and Nordea. NetEnt has notified stakeholders that the results for the third quarter of 2019 will include transaction and financing costs of around £4.6m ($5.7m).

Lazard, one of the world’s leading financial advisors on acquisitions, and Stockholm-based business law firm Cirio Advokatbyrå assisted NetEnt in completing the transaction.

NetEnt flexes its muscles

The size of the deal has taken many experts in the industry by surprise. There has been lots of speculation surrounding the performance of NetEnt ever since the board removed former CEO Per Eriksson in March 2018.

Despite reporting a full-year revenue increase of 9% for 2018, NetEnt rounded the year off by announcing 55 redundancies at its Stockholm headquarters in December. At the time, the gaming giant said these cuts were being made to save up to £1.7m ($2.1m).

It said these funds would allow the company to reinvest in game development in a bid to release up to three new titles per month throughout 2019. One of these titles was Dead or Alive 2, arguably one of the most anticipated and successful releases in online casino history.  

NetEnt Group CEO Therese Hillman has been credited with revitalizing the company since taking over from Eriksson. Commenting on how pleased she is to welcome Red Tiger into the group, she said:

The acquisition combines two of the leading and most innovative companies in the online gaming industry.”

Hillman went on to state that the acquisition will offer further value to both players and operators.

Monumental year for Red Tiger

Founded in 2014, Red Tiger has gone from strength to strength in recent years. The leading casino games developer has over 170 employees on its payroll, with offices located in Bulgaria, the Isle of Man, and Malta.

Several games studios in the iGaming industry have been founded by former NetEnt employees, including Thunderkick. The team behind Red Tiger were the geniuses who formed Cayetano Gaming, a Bulgaria-based game studio now owned by Flutter Entertainment.

This year has already seen Red Tiger’s ever-growing library of video slots go live at Grand Casino Baden, the first licensed casino in Switzerland. Other platforms now offering popular titles like Pirates’ Plenty and Devil’s Number include Paf and Betfred.

The CEO of Red Tiger Gaming, Gavin Hamilton, said the acquisition by NetEnt will “unlock new opportunities” for the company and “accelerate further growth”.