The Competition and Markets Authority (CMA) in the UK has launched an inquiry regarding the merger between Swedish online casino content providers Evolution Gaming and NetEnt in order to determine what effect this mega-deal will have on competition in the local gambling industry.
On June this year, Evolution Gaming proposed an offer to buy its fellow provider with the goal of strengthening its position across regulated European markets and in the United States where both companies have been aiming to grow their market share.
Evolution's offer values NetEnt at SEK19.6 billion (approx. $2.1 billion), meaning a merger of the two shall create a true B2B gambling powerhouse.
These two companies have a strong presence in the UK, which is why the CMA (a non-ministerial government department in the UK responsible for strengthening business competition and preventing and reducing anti-competitive activities) reviewing their tie-up is inevitable.
The CMA posted a notice on Tuesday, September 22 that said it has launched an investigation on the anticipated acquisition of NetEnt AB by Evolution Gaming Group AB, and that it wants to determine whether the deal will "result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services."
NetEnt creates and supplies table games and online slots, while Evolution Gaming specializes in the provision of live casino solutions. The former has also been investing heavily on its own, growing their live casino in recent years. For instance, in late 2019 NetEnt successfully acquired online slots maker Red Tiger Gaming in a £200 million deal.
When asked for the reasons on the acquisition, Evolution Gaming emphasized that the goal of the merger was to drive digitalization in gaming. A spokesperson said, "The combined company will become a leading online gaming provider with a strong platform for international growth and expansion. The merger of Evolution's leading position in live casino with NetEnt's strong position in slots will create a best-in-class B2B provider with capacity to drive the digitalisation of the global gaming industry."
Obviously, NetEnt's acquisition of slot developer Red Tiger Gaming in September 2019 also piqued Evolution's interest. Evolution's spokesperson said, "Red Tiger is a part of NetEnt. So naturally we have considered the whole company in the offer."
Evolution Gaming expects that the proposal, which the spokesperson described as a very attractive offer, will be accepted with open arms by NetEnt after receiving support from all the major shareholders in the company.
The tie-up, priced at SEK 79.93 (€7) per share, will see Evolution acquire 90% of NetEnt's corporate shareholding.
CMA Probe Interrupts Original Timeline of Deal Closure
The CMA began its merger inquiry this Monday, September 21 and invited interested parties to submit their comments on the mega-deal by October 5. The regulator said in its notice that it would finalize a decision by November 16.
The CMA, however, warned that the deadline of the case could change at any point during the assessment process on the merger due to a number of reasons.
When it announced its offer last June, Evolution Gaming said that their proposal on the tie-up would expire on October 26 and that it expects the transaction would be finalized on November 2.
Because of CMA stepping in and launching an investigation, the deadline of the deal's closure will definitely be pushed back. In the event the regulator finds any issues with the tie-up, its finalization could be delayed even further.
Earlier this year, Evolution Gaming said its "position within live casino with NetEnt's position within online slots will create a company well positioned to take significant market shares." The combination of the two companies will allow them to open the window to more opportunities in the United States.
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Source:
https://www.finsmes.com/2020/09/evolution-gaming-to-acquire-netent-for-approx-2-1-billion.html
https://inkedin.com/cma-investigates-evolutions-netent-acquisition/17206/
