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Casino supplier AGS has agreed definitive terms with a middle market private equity fund to be taken private in a $1.1bn deal.

The NYSE-listed slots manufacturer and iGaming content business issued a release yesterday (9 May) detailing its acquisition agreement with affiliates of Brightstar Capital Partners.

AGS’ board of directors has unanimously approved the deal, which values the company at $12.50 per share.

This implies an approximately $1.1bn total market cap and represents a 40% premium on the business’ closing price on 8 May.

It comes following a failed $370m 2022 acquisition bid by Inspired Entertainment, which reportedly collapsed after the supplier failed to raise its offer.

AGS president and CEO David Lopez (pictured left) said: “We are very pleased to reach this agreement, which we believe provides our stockholders with compelling, certain cash value.

“With Brightstar’s resources and strategic guidance, we believe AGS will be well-positioned to make targeted investments in R&D, top talent, operations, and industry-leading innovation, which should accelerate our global footprint.”

AGS’ share price shot up 27.4% to $11.34 per share in the wake of the deal.

Brightstar highlights AGS’ ‘innovative approach’

Brightstar is a middle market private equity fund with $4.1bn in assets under management, focused on industrial, manufacturing and services businesses.

The fund said it was impressed by AGS’ products, differentiated culture and reputation within the industry, as well as its innovative approach to game development.

Brightstar CEO Andrew Weinberg said: “We look forward to working with David and the AGS team to capitalise on opportunities by taking a long-term approach to creating value.”

AGS said following the agreement it would neither host an earnings call nor issue a release outlining its Q1 2024 financial results.

Due to US financial law, AGS still reported its Q1 results in a 10-K SEC filing, with the business recording a 15.4% rise in revenue to $96m during the quarter.

From this total, the company achieved $44m in EBITDA and a $4.3m net income for the three-month period.  

Deal to be investigated

Following the announcement, class action litigant Halper Sadeh LLC said it is investigating whether the deal is fair to AGS shareholders.

The firm said the investigation will concern whether AGS and its board violated federal securities laws or breached their fiduciary duties to shareholders.

It added that this could have occurred through failures to obtain the best possible consideration or disclose all material necessary for shareholders to evaluate the deal.

The deal is just the latest major strategic move in the US supplier space.

IGT announced in February that it plans to merge its land-based and iGaming divisions with Everi in a $6.2bn merger, for example.

Brightstar partner Roger Bulloch (pictured right) added: “We trust that partnering with AGS and executing on our shared vision can accelerate the company’s ability to create even greater value for its customers and players around the world.”

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