AGS Soars on Reported Inspired Entertainment Takeover Bid
Device manufacturer AGS (NYSE:AGS) was easy one of Friday’s top-performing gaming stocks, surging 25.25% on loudness that was about eight times the day-by-day mediocre on reports Inspired Entertainment (NASDAQ:INSE) is moving to gain the Las Vegas-based expansion slot machine maker.
Unidentified sources familiar with the matter told Reuters Inspired offered $10 a part inwards immediate payment for AGS, valuing the point at $370 million. That offer, if made and accepted, implies shares of the mark get often further to rise. AGS inventory closed in(p) today at $7.51 — its highest closure print since March — after trading as high as $8.40. As of the closelipped of US markets today, the target’s marketplace capitalization is $231.42 million.
Neither troupe commented on the matter, but analysts ascertain a takeover of AGS by Inspired as credible.
In our view, a possible compounding of the 2 companies would hold merit, and we trust growth INSE’s boilersuit valuation multiple, cognitive content depth, and Frederick North America hard cash flow mix,” said B. Riley analyst David Bain in a remark to clients today.
He rates AGS a “buy” with a $14 toll target and acknowledges the 66% premium to AGS’s Th closing cost Inspired is rumored to be offering is “healthy.”
Inspired Offer for AGS ‘Unique Proposal’
In the gaming industry, the bulk of consolidation activity over the shoemaker's last several years centered around land-based casino operators and sports wagering.
Conversely, mergers and acquisitions activity among expansion slot machine makers is rare because gaming level managers the like diversification. Additionally, gaming twist makers are often viewed as unappealing targets for private equity suitors. Still, analysts check merit inwards Inspired potentially purchasing AGS.
“However, the proposed dealings is unique in that overlap between the two companies product-wise is effectively zero. Within land-based gaming, INSE offers a server-based modelling focussed on distributed venues, with the current land-based slot revenue profile predominately coming from Europe,” noted Stifel analyst Jeffrey Stantial inward a account released before Friday.
Inspired is viewed as a gambol on the digital gaming boom, as well as the possible development of the North American online lottery market, which some analysts idea could eventually exceed $11 1000000000000 inwards value.
With AGS, “INSE would live getting their hands on a steadily up provider with significant runway to preserve taking deal in premium leased and socio-economic class III markets. We also note the remotion of the Phoebus Apollo ownership likely yields additional addressable markets,” adds Stantial.
Some AGS Investors may non Be Pleased
It remains to live seen if reports are exact that Inspired is inwards fact moving on AGS, if another suer gets involved and if Inspired lifts it offering — Stantial notes $10 a share is low.
What is decipherable is that some long-term AGS investors may bump Inspired’s bid less than inspiring. AGS went public at $16 a apportion and traded as in high spirits as $32 inward 2018. For its part, Inspired made all the way it is mulling acquisition opportunities, but it won’t overpay simply to acquire a business deal done.
“We’re not going to pay a screwball cost for anything,” CFO Steward Baker said on the company’s second-quarter earnings group discussion call. “And we insist on thither being immediate and seeable synergies. So we’re going to apportion working capital to M&A, but only if if it makes the tolerant of sense that we’re used to doing.”
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