Sega Sammy Creation, a well-known Japanese company in the gaming industry, has announced its acquisition of sports betting technology firm GAN Ltd. for around $84.4 million, marking its foray into the sports betting market. The deal values GAN at $1.97 a share, a substantial 121% premium to its previous closing stock price.
The acquisition is scheduled to be voted on by GAN investors in the first quarter and could be finalized by the fourth quarter of 2024. If approved, GAN will no longer be a publicly traded company and will become a wholly owned subsidiary of Sega Sammy Creation.
The decision to acquire GAN comes after a period of decline for the UK-based company, which went public in the U.S. three and a half years ago. The stock enjoyed initial success, reaching a high of $32 a share in February 2021, but has since experienced a significant drop in value, closing at 89.1 cents on Tuesday.
Sega Sammy’s move to acquire GAN is not entirely surprising given the recent announcement of a strategic review by GAN to explore options for improving its profitability. Additionally, Sega Sammy had previously taken over a term loan from GAN creditor Beach Point Capital, indicating a growing relationship between the two companies.
In response to the acquisition, GAN interim CEO Seamus McGill stated, “After a thoughtful review of value creation opportunities available to us, we are pleased to have reached this agreement with SSC. Market share concentration in the U.S. B2C space, a slower than expected adoption of regulated online gaming in the U.S., along with changes to key customer contracts make the near-term operating environment challenging without ample capital resources. Sega Sammy has those resources and GAN is a strategic complement to their existing gaming portfolio.”
The acquisition of GAN by Sega Sammy reflects the growing significance of technology in the sports betting market, and signifies an important strategic move for both companies.