Evolution AB (publ)’s wholly owned subsidiary, Evolution Malta Holding Limited, (“Evolution”) has entered into an agreement to acquire Galaxy Gaming, Inc. (“Galaxy Gaming”) for a total equity value of approximately $85 million(the “Transaction”), payable in cash.

Transaction highlights and strategic rationale

Galaxy Gaming, a leading developer and distributor of innovative casino table games and enhanced gaming technology solutions, continues to revolutionize the casino industry with its state-of-the-art products and exceptional service. With a diverse portfolio of cutting-edge games, Galaxy Gaming has established itself as a trusted partner to casinos worldwide.

The acquisition is in line with Evolution’s strategy of being the world’s top provider of casino games, supplying its customers with the best gaming content. With the acquisition of Galaxy Gaming, Evolution solidifies its presence in the US market and enhances its position as a leading licensor of proprietary tables games to the online gaming industry.

“We are thrilled to announce the acquisition of Galaxy Gaming, which represents a significant milestone in our mission to provide unparalleled gaming experiences to our customers. Galaxy Gaming’s exceptional products and technology complement our existing portfolio and strengthen our strategic position.” – Martin Carlesund, CEO Evolution AB (publ)

“Evolution intends to retain the management and employees and also plans to operate Galaxy Gaming as a separate and independent business unit,” added Carlesund

“We believe this transaction represents the opportunity to unite two world-class, customer-focused teams in a way that will benefit all stakeholders. It combines Galaxy Gaming’s thriving land-based business, driven by our industry-leading games and progressive technologies, with Evolution’s global reach and innovative online gaming leadership. For years, our collaboration has successfully delivered popular games like 21+3® and LuckyLadies® to millions of players in regulated iGaming markets globally. This acquisition by Evolution empowers Galaxy to sustain and maintain its independence while continuing to focus on growth and expanding its operations, leveragingEvolution’s operational and financial strength to facilitate product sharing and drive cutting-edge omni-channel innovation.“ – Matt Reback, President and CEO, Galaxy Gaming.

Galaxy Gaming has provided guidance of $29.0 – $30.0 million in Net Revenue and $12.0 – $13.0 million in Adjusted EBITDA for fiscal year 2024.

Consideration and financing

Pursuant to the Merger Agreement, Evolution has agreed to acquire all of the outstanding shares of common stock of Galaxy Gaming for$3.20 per share in cash, which represents a premium of 124% to Galaxy Gaming’s closing share price on July 17, 2024, the last trading day prior to the announcement of the Transaction. The Transaction values Galaxy Gaming at at total equity value of approximately $85 million, and approximately $124 million including net debt. The consideration will be financed with cash on hand.

 Conditions and time plan for the acquisition

The Transaction has been approved by the board of directors of Galaxy Gaming. Galaxy Gaming board members holding approximately 14%of Galaxy Gaming’s common stock have entered into support agreements to vote their shares in favor of the Transaction.

The Transaction is subject to customary closing conditions, including Galaxy Gaming stockholder approval and certain required gaming regulatory approvals.  The parties currently expect the closing to occur in mid-2025, subject to satisfaction of those closing conditions.

 Advisors

Evolution has engaged J.P. Morgan SE as exclusive financial advisor and Kirkland & Ellis LLP as legal advisor in connection with the Transaction. Galaxy Gaming has engaged Macquarie Capital as exclusive financial advisor and Latham & Watkins LLP as legal advisor in connection with the Transaction.