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Global Cash Access agrees $1.2bn deal to acquire Multimedia Games

8th September 2014 12:19 pm GMT

Payment solutions provider Global Cash Access (GCA) has broadened its portfolio of solutions for the gaming industry with the acquisition of games supplier Multimedia Games for $1.2bn in cash.

The merger agreement will see GCA acquire all the outstanding common stock of Multimedia Games Holding Company for $36.50 per share, representing a 31 per cent premium to the closing stock price on Friday. This values the deal at approximately $1.2bn.

GCA is a leading provider of payments, cash access and cash management solutions across the gaming industry. It was the first payments provider to gain licence aproval in the Nevada online gaming market, and released its Everi payment solutions last year on GameAccount's US online gaming platform.

GCA president and CEO Ram Chary said that the acquisition represented a “gaming-relevant transformational opportunity” to combine two companies with rich gaming heritages and “uniquely positions GCA as an important strategic partner to gaming operators by offering them deeper and more integrated solutions across their entire gaming floor.”

“This acquisition further strengthens and broadens GCA's portfolio of solutions, which has been embraced by our customer base,” he said.

NASDAQ-listed Multimedia Games was founded in 1991 and provides various Class II, Class III and video lottery terminal (VLT) games across a number of US markets including Nevada, New York, Washington, California, Iowa and the Canadian state of Ontario.

It has also expanded into online gaming, with a deal to bring its popular land-based casino games to the online market with GameAccount Network, while the company partnered Bee Cave Games to launch free-to-play variants of its games.

“We are excited about the opportunity this combination provides to leverage Multimedia Games' creative and innovative game development capabilities with GCA's expansive customer base to provide best-in-class, integrated solutions to the gaming community, and deliver increased value and scale to our respective customers and employees,” said Patrick Ramsey, CEO of Multimedia Games.

The proposed acquisition will be financed with debt and cash on hand for which GCA has secured committed debt financing. The proposed acquisition is subject to customary closing conditions, including receipt of Multimedia Games shareholder approval and antitrust and gaming regulatory approvals, and is expected to be completed in early 2015.

The transaction has been unanimously approved by the boards of directors of both companies.

The merger is expected to achieve approximately $30m of synergies as a combined entity, and, on a pro forma basis, is estimated to generate about $800m in revenues and approximately $217m in adjusted EBITDA based on the last twelve months results as of June 30th.

Chary will continue to serve as president and CEO of GCA, with the combined company's headquarters remaining in Las Vegas, Nevada, and its game development operations based in Austin, Texas.

Shares in Global Cash Access Holdings Inc (NASDAQ:GCA) will commence trading at $7.52 per share in New York later today, while shares in Multimedia Games Holding Company Inc (NASDAQ:MGAM) will open at $27.78 per share.

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