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Inspired to Acquire Novomatic UK for US$120M

Mia Gardner | 14 Jun 2019

Gaming technology provider Novomatic UK is set to be acquired by Inspired Entertainment for US$120 million. According to reports, the latter hopes that an increase in scale, as well as cost sharing, will result in synergies of between $12.3m and $13.3m.

The UK division of the Austria-based Novomatic Group is made up of Astra Games, Bell-Fruit Group, Gamestec Leisure, Harlequin Gaming, Innov8 Gaming, and Playnation. However, Astra’s casino assets are not part of the deal.

The soon-to-be-acquired group is the largest of its kind in the UK, and provides category B3, C, and D gaming terminals to various venues. Among them are arcades and holiday resorts, as well as other establishments in the food, beverage, and hospitality industry. The acquisition will see Inspired take over the management of more than 75,000 of those machines, which are not limited to the United Kingdom. 

More Offerings and Faster Growth

Inspired’s executive chairperson, Lorne Weil said that the acquisition will allow the company to expand the number of products it offers clients. It also gives his company a presence in new regions.

He explained that this would provide impetus to key areas of growth, and not least because the companies’ products complement, rather than compete with, one another. Ultimately, the effect the acquisition will have on Inspired is a sharp increase in scope and in size.

In addition to supplying different types of slot machines and games to what Novomatic UK does, Inspired‘s capabilities for operational logistics offer it further possibility for growth after the acquisition is complete. This is expected to be sometime during the third quarter of this year, and will be followed by cost-saving measures such as sharing development, manufacture, and maintenance. The company also will convert the provider’s games library into digital format for distribution online.

Improved Capital Structure

The acquisition will do more than improve Inspired’s offerings and footprint. According to Stewart Baker, the company’s chief financial officer and executive vice president, it also will bolster its capital structure.

Baker explained that the planned financing, being at a lower interest rate than the company’s current debt, essentially offers lower capital cost, as well as maturity extension and a healthier balance sheet. He added that, ultimately, it would allow the company greater freedom to leverage growth opportunities.

Inspired supplies interactive and server-based gaming systems, as well as virtual sports products and other digital content to licensed casino and lottery operators in 35 regulated jurisdictions. Its products are available on more than 34,000 terminals, while its virtual sports are available on more than 100 websites and more than 40,000 retail channels. It has more than 650 employees in the UK and further afield.

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