M&A: NeoGames shares soar after Aristocrat acquisition of $1.2 billion

Lottery solutions

NeoGames is a technology firm that provides online lottery solutions and services to national and state-regulated lotteries (B2G). As online gaming started to become regulated in the US, NeoGames expanded its strategy and grew its market share in the sector.

In 2022, NeoGames bought online gaming tech company Aspire Global.

Considered to be a leader in B2G and B2B technology and service provider to state lotteries, NeoGames offers its customers a full service solution that includes all elements required to participate in lottery games via personal computers and smartphones.

NeoGames also has an innovative sports betting platform via an advanced aggregated content solution

Under the terms of the acquisition, NeoGames has agreed to transfer its registered office from Luxembourg to the Cayman Islands. The company will become a wholly owned subsidiary of Aristocrat.

CEO Moti Malul represents a great outcome for all of Neogames’ stakeholders.

I am tremendously proud of our entire team at NeoGames, as together we have established our leadership position, driving our success across iLottery, iGaming and online sportsbetting. We are delighted that the team at Aristrocrat recognises the significance of what we have built and the strategic opportunity to combine our complementary businesseses. ” Moti Malul – CEO – NeoGames

First Quarter results

NeoGames: First Quarter Revenues and Share of NPI Revenues Interest total US $64.3 million, up 187% year-over-year

“We are pleased to have carried the momentum we exited 2022 with, into the start of 2023 as we took steps to further solidify our position as the global leader in iLottery, sports betting and iGaming solutions. Toward this end, we were proud to be recognized by EGR North America as the lottery supplier of the year, as well as with the Gold distinction for ‘Best New Game’, beating other pure gaming companies with our title, Desert Fantasy. In iLottery, our proprietary games from NeoGames Studio continued to perform strongly across all of our key accounts, and together with the Jackpot runs early in the quarter, have contributed to strong performance in the US.” Moti Malul, Chief Executive Officer – NeoGames

Achievements: NeoGames also announced that the Virginia Lottery was the first US lottery to operate a completely cloud-based iLottery. On the sportsbetting front, BtoBet?processed approximately one billion bets during the month of March, an all-time high. In iGaming, Pariplay also had a very active quarter, going live with twelve operators, including DraftKings in the US, and signing another nine, including Betsson.

Revenue for Neogames grew from 187 percent year-on-year and EBITDA margins were maintained above 30 percent at group level.

Recent Business Highlights: The first Capital Markets Day in New York where leaders from across different businesses were able to make a presentation to over one hundred in-person and virtual investors and analysts.

Neogames is represented by Stifel.

The deal

Integrated businesses: NeoGames has an enterprise value of US $1.8 billion. The combined business offers an iGaming division supported by Aspire, sportsbetting via BtoBet, and an iLottery business aggregator with Pariplay across more than 50 regulated markets. The iLottery business has 67 percent market share in the US.

Aristocrat’s latest acquisition is an attempt to position itself as a strong player in the real money gaming (RMG) sector, a part of the industry that involves online gambling through digital casinos, lotteries and sports betting sites. The segment is worth US $81 billion? and growing at a rapid rate.

The terms of the acquisition will allow both companies to operate in their own space and keep an identity. NeoGames’ CEO Maimon said that the two companies will complement each other without “overlapping”. He added that NeoGames will play a crucial role in Aristocrat’s future expansion.

The deal’s announcement also coincided with a US $500 million expansion of Aristocrat’s share buyback, expanding it to US $1.5 billion.

Aristocrat shares closed 1.2 per cent higher at US $39.15 on Monday.