For everyone involved in online gaming, a quiet and unsuspecting Thursday ended abruptly with the announcement that industry giant NetEnt AB had agreed to acquire one of its competitors, Red Tiger Gaming, for an initial GBP 197 million. The amount could grow by another GBP 23 million by 2022 based on the performance for the period.
Considering that Red Tiger Gaming was founded in 2014 only, the amount seems unprecedented even for a fast-growing industry like online gaming. However, the studio has made a name itself for developing top-class casino games and stands out from the crowd especially for its slot masterpieces such as Dragon’s Fire, Pirates Plenty: Battle For Gold or Laser Fruit. It has also signed a licensing deal for the Megaways engine, releasing in 2019 their first games named Mystery Reel Megaways or Dragon’s Fire Megaways. In total, the studio released over 100 video slots ranging from single liners all the way up to unprecedented 60,466,176 ways.
Red Tiger Gaming is headquartered on the Isle of Man and has secondary offices in Malta and Bulgaria, employing a total of 170 people and has an expected EBITDA ( earnings before interest, taxes, depreciation and amortization) for 2019 topping GBP 18 million. That pegs the purchasing price NetEnt is paying to c. 12 times current year EBITDA, which is well in line with company acquisitions of this size.
NetEnt is, of course, a much larger enterprise listed on the Stockholm Stock Exchange and although its share price nearly halved since its peak in 2007, the company has been on an upward trajectory for the last two years. Employing over 800 people in seven locations around the globe, they heavily invested in new regulated markets such as the USA or Asian region, not just acquiring the appropriate licenses but also developing dedicated slots and games that appeal to the new clientele.
From their press release on 5th September 2019:
Gavin Hamilton, CEO of Red Tiger: “This is an exciting new stage of the Red Tiger story and we are delighted to become part of the NetEnt group. Accessing NetEnt’s unparalleled distribution network and geographic footprint will unlock new opportunities for Red Tiger and will further accelerate our growth. At Red Tiger, we’ll remain focused as always on driving further innovation and we are looking forward to working with NetEnt on how to leverage our combined capabilities to create new products that wow our customers.”
Therese Hillman, Group CEO of NetEnt: “I am very pleased to welcome Red Tiger into the NetEnt Group. The acquisition combines two of the leading and most innovative companies in the online gaming industry. We look forward to working with Red Tiger’s fantastic team to enhance our combined global reach and to offer further value to operators and players. The transaction will provide significant revenue synergies across our markets worldwide.”
Looking at the combined market penetration and creative power, there will be much to be expected from the new “marriage” of these two extraordinary game studios who had quite an impact on the casino community in the last decade. According to NetEnt, the deal is in line with its vision to create the future of online gaming. We shall keep an eye on the next developments!