Light & Wonder is set to enter the charitable gaming sector in the United States through the acquisition of Grover Gaming in a deal worth up to $1.05 billion.
Under the definitive agreement, Light & Wonder will pay an upfront amount of $850 million in cash, subject to customary purchase price adjustments, and a four-year revenue based earn-out of up to $200 million in cash.
The upfront consideration implies a multiple of 7.7x based on Grover’s 2024 adjusted EBITDA, and a 7.1x multiple based on Grover’s run rate adjusted EBITDA.
Light & Wonder said that the acquisition provides the company with an opportunity to expand into another “high growth regulated adjacency” in which the company is not currently a participant.
“Grover Gaming is a leading player in charitable gaming, a category that has experienced significant growth in recent years,” said Light & Wonder president and CEO Matt Wilson. “This transaction complements our position as the leading cross-platform global games company by adding another compelling regulated adjacency to our profile.
“Importantly, there are exciting incremental revenue opportunities to be realized by leveraging Light & Wonder’s proven land-based gaming content to a new and loyal customer base. We look forward to continuing to partner with Grover Gaming’s customers, building on its strong dedication to customer service.”
Founded in 2013 and headquartered in Greenville, North Carolina, Grover Gaming currently operates an installed base of over 10,000 leased electronic pull-tab units (E-Pull tabs) under a recurring revenue model across five US states – North Dakota, Ohio, Virginia, Kentucky and New Hampshire.
In its preliminary results for 2024, Grover Gaming’s revenue increased by 31 per cent to $135 million, with adjusted EBITDA climbing 34 per cent to $111 million. North Dakota and Ohio are its biggest markets.
E-Pull tabs are currently legal in 11 US states, with 39 states allowing for paper products in charitable gaming, with Light & Wonder noting the potential for expansion if E-Pull tabs are legalized in new states.
“I am very thankful for all of our Grover Gaming teammates and how hard they work every day,” said Grover Gaming CEO and founder Garrett Blackwelder. “I’m also grateful for our customers’ loyalty over the past two decades. We realize without them, we wouldn’t be where we are today.
“Light & Wonder is an ideal partner for us, given our similar company cultures and dedication to innovation and customer service. We are excited to see Charitable Gaming taken to a new level.”
Under the terms of the acquisition, Blackwelder will collaborate with Light & Wonder to help drive the continued success of the business over the next three years.
Light & Wonder expects the transaction to close during the second quarter of 2025, subject to required regulatory and other approvals, as well as customary closing conditions.
The acquisition is expected to be funded by Light & Wonder’s existing cash and incremental debt financing.
Post-acquisition, Light & Wonder expects its net debt leverage ratio on a combined basis to remain within its target range of 2.5x-3.5x.
Shares in Light & Wonder Inc (NASDAQ:LNW) closed 0.81 per cent lower at $97.02 per share in New York, and fell a further 1.04 per cent to $96.01 in pre-market trading Tuesday following the news.