Shareholders of VGW in variance over Escalante's potential buyout
The world's largest sweepstakes casino operator, VGW, is set to go private following the approval of a A$3.2bn buy-out by its majority owner and CEO, Laurence Escalante. The resolution for the buy-out was supported by approximately 91% of VGW minority shareholders at both the Scheme Meeting and General Meeting.
The buy-out, proposed by LEO's Ocean BidCo vehicle, will be finalised on August 20th. Escalante, who already holds a 70% ownership stake in VGW, had expressed tiredness in dealing with his minority shareholders.
The approval of the buy-out has resulted in a "mixed" mood among VGW's minority shareholders. One anonymous minority shareholder reported a "mixed" mood following the approval of the buy-out.
The tense relationship between Escalante and minority shareholders had been strained due to concerns over governance, valuation, and regulatory risks, especially in the U.S. In a private Telegram group chat, Escalante engaged in an expletive-laced rant with his shareholders. Despite this, he urged minority shareholders to either trust him or exit the business.
Mike Symons, chairman of the Independent Board Committee, expressed gratitude to all VGW shareholders for their participation and support. The move comes as VGW faces mounting regulatory pressures across the U.S., leading to the withdrawal of its core products in several states.
The buy-out will see VGW incorporate the business in the corporate tax haven Guernsey while keeping its office in Perth, Australia. This needs to be approved by the Federal Court. Minority shareholders can choose to receive cash, shares in the new holding company Ocean BidCo Limited (a Guernsey-based special purpose vehicle), or a combination of both.
Escalante, in a statement, thanked shareholders for their support and welcomed those continuing as shareholders via BidCo, indicating continued confidence in VGW’s growth trajectory and evolution since its founding nearly 15 years ago. The privatization through this buy-out allows Escalante to consolidate control and potentially navigate regulatory and strategic challenges with greater flexibility.
[1] The Australian Financial Review [2] The West Australian [3] The Sydney Morning Herald [4] The Age [5] ABC News
- The buy-out of VGW, the world's largest sweepstakes casino operator, will not only alter its corporate structure by incorporating in Guernsey, but also give Escalante greater control for navigating future regulatory and strategic challenges in the gaming and investing business.
- After the buy-out, minority shareholders will have the option to receive cash, shares in the new holding company Ocean BidCo Limited (a Guernsey-based special purpose vehicle), or a combination of both, as VGW aims to continue its growth trajectory in the casino and finance industry.
- In the aftermath of the buy-out, renowned Australian media outlets such as The Australian Financial Review, The West Australian, The Sydney Morning Herald, The Age, and ABC News are expected to delve into the potential implications for VGW's future in the gambling and business sectors.
