GAN Limited (NASDAQ: GAN), a business-to-business supplier of internet gaming software-as-a-service solutions primarily to the U.S. land-based casino industry, is to acquire Vincent Group p.l.c., a Malta-based public limited company that operates an online gaming platform under the flagship brand Coolbet, for approximately €149m.
The deal – made of a combination of cash and stock – is expected to close in the first quarter of 2021, subject to regulatory review and the satisfaction of certain closing conditions. The transaction has been unanimously approved by GAN Limited’s board of directors.
Founded by Jan Svendsen, Coolbet is a Business-to-Consumer iGaming operator that offers online real-money gaming in sports, casino, poker and virtual e-sports.
The company currently has approximately 175 full-time employees, primarily based in Tallinn, Estonia, and a management team with extensive experience in the RMiG industry and gambling licenses in Estonia, Sweden and Malta.
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GAN has developed a proprietary internet gambling enterprise software system, GameSTACK™, which it licenses to land-based casino operators as a technology solution for regulated real-money internet gambling, encompassing internet gaming, internet sports gaming and virtual Simulated Gaming.
With the acquisition, GAN will integrate Coolbet’s proprietary sports betting technology into its tech solutions for launch in the U.S. RMiG market by the second half of next year.
The deal will also give an opportunity to leverage GAN’s business-to-business experience and proprietary technology and enter it into Coolbet’s core markets and across its existing relationships with casino operators around the globe.
According to GAN Chief Executive Officer Dermot Smurfit, from the IPO, GAN has continued to enhance and perfect its internet gaming software-as-a-service solutions for the U.S. market. As a part of this growth strategy, they needed to add a sportsbook engine to round out its real money iGaming platform. Under his point of view, Coolbet represents the perfect fit for both the company and its customers. Coolbet launched in early 2016 in Northern Europe and later expanded into Latin America and Canada. Its user interface and proprietary platform will allow GAN to quickly introduce the sportsbook offering to land-based casino customers across the U.S. Dermot Smurfit also said that “The timing of the acquisition ideally positions GAN to leverage its growing customer base, as well as the momentum that sports legislation has seen with the election results in Maryland, Louisiana, South Dakota, and Tennessee.”
Coolbet, which has an established global business, a loyal B2C customer base, a diversified revenue stream, as well as expertise and relationships in other markets, will enable GAN to achieve scale and diversity across revenue streams. With the deal, the company will now add Coolbet’s employees and engineers, as well as over 84,000 active customers.
Despite the impact of COVID-19 on its markets in the second quarter of 2020,Coolbet’s revenue for the first nine months of 2020 was €18.6m, split approx. 50% in sports betting and 50% in casino and other activities, with customers in Norway, Sweden, Finland, Iceland, Estonia, Chile, as well as in recently launched markets in Canada and Peru.
The company has achieved an EBITDA of €0.5M for the nine months ended September 30, 2020 and break-even Net Operating Income.
The same day of the acquisition announcement, GAN reported its third quarter 2020 financial results.
Highlights compared to prior year quarter included:
- Quarterly revenue of $10.3m, up 86% from $5.5m
- Real money Internet gaming (“RMiG”) revenue of $7.7m, up from $4.1m
- Simulated gaming revenue of $2.6m, up from $1.4m
- Gross profit of $6.4m, up from $2.4m
- Net loss attributable to equity holders was $4.1m, or $0.14 basic and diluted per share, compared to net loss attributable to equity holders of $1.8m, or $0.09 basic and diluted per share
- Gross Operator Revenue increased 76% to $142.3m
- Active Player-Days and Average Revenue per Daily Active User (“ARPDAU”) increased 38% and 27%, respectively
- Adjusted EBITDA was $(0.1)m, up from $(0.4)m.