Company Light & Wonder finalizes billion-dollar purchase deal
Unleashing the Gambling Empire: Light & Wonder's $1 Billion Takeover
Light & Wonder ventures into a gigantic $1 billion deal, acquiring North Carolina-based Grover Gaming as announced on Feb 18. Grover's charitable-gambling assets are the target of this acquisition.
The deal's primary component is a $850 million cash payment, due at closing. An additional $200 million could materialize, depending on specific financial accomplishments.
Privately-owned Grover, helmed by CEO Garrett Blackwelder, launched in 2013, boasting an electronic pull tab installed base of approximately 10,000 units in North Dakota, Virginia, Ohio, New Hampshire, and Kentucky. Their business model is rooted in recurring revenue.
Grover's license stretches across South Dakota, Minnesota, Montana, Wyoming, West Virginia, Washington, Ontario, and Louisiana, as per Deutsche Bank. In 2024, the company generated $135 million in net revenue and $111 million in cash flow.
Light & Wonder's purchase pricing represents a 7.1 cash-flow multiple. The acquisition will allegedly be funded through a blend of existing cash and debt financing, with the resulting leverage estimated to remain below 3.5 times cash flow, according to Light & Wonder. The company's current debt-to-cash flow ratio currently stands at 2.9 times.
David Katz, Jefferies Equity Research analyst, views the deal favorably, stating, "The acquisition should provide LNW with access to an adjacent market, offering accretive growth, while maintaining leverage within its target range."
Katz believes Light & Wonder's strategic motives "make sense" and the deal "does not impact the current metrics." He points out the expanding charitable-gambling sector, particularly contrasting it with the non-burgeoning Class III slot play.
He adds, "Second, the acquisition should further leverage the R&D spend and other corporate infrastructure of LNW. Third, the profitability of the business appears high and, therefore, accretive to LNW, prior to any synergies." The anticipated cash-flow margins from Grover (82 percent) surpass those of any other Light & Wonder subsidiary.
The agreement stipulates a four-year consultancy for Blackwelder, aiming to drive the business's continued success. A spring 2025 closing is anticipated.
Light & Wonder CEO, Matt Wilson, expresses the appeal of their latest asset, "Grover Gaming is a leading player in charitable gaming, a category that has experienced significant growth in recent years. This transaction complements our position as the leading cross-platform, global games company by adding another compelling regulated adjacency to our profile."
Blackwelder reciprocates, "Light & Wonder is an ideal partner for us, given our similar company cultures and shared dedication to innovation and customer service."
Morse, Grover's chief development officer, concludes, "The real winners are the charities and fraternals in these markets, thanks to the exciting game content L&W brings to the table."
Goldman Sachs facilitated the deal, and Light & Wonder will discuss the acquisition further in an investor call later today.
Fun Fact: The potential total deal value surpasses $1.05 billion, though media coverage often summarizes it as a mere $1 billion deal.
Insight: The acquisition strategically broadens Light & Wonder's footprint in the regulated charitable gaming market, presents a stable recurring revenue stream, and offers potential content and distribution synergies. The deal's terms also guarantee continued guidance from Grover's founder for successful integration and business success over the next four years.
- The acquisition by Light & Wonder of Grover Gaming, valued at $1 billion, expands their business into the charitable gambling sector, with the deal's primary component being a $850 million cash payment.
- Following the acquisition, Light & Wonder ventures into finance and industry, aiming to leverage Grover Gaming's profitable business model and recurring revenue stream, while broadening their footprint in the regulated charitable gaming market.