Bloomberg Global Cash Access Holdings Inc. (GCI), a provider of money-transaction technology to the casino industry, agreed to acquire Multimedia Games Holding Co. for $1.2 billion in cash, gaining a creator of electronic-gambling units to American Indian casinos and lotteries.
The transaction values Multimedia at $36.50 a share, a 31 percent premium to its closing price Sept. 5. The deal will be financed with debt and cash on hand, Las Vegas-based GCA said in a statement.
GCA provides casino customers access to cash through ATMs, point-of-sale and debit-card transactions as well and offers slot-machine ticket redemption and jackpot kiosks. The company processes about 90 million transactions annually, dispensing more than $19 billion in cash, according to its website. Austin, Texas-based Multimedia is a creator and supplier of systems, content and electronic gambling units, and as of September 2013 had 205 gaming licenses in 29 U.S. states, according to its most recent annual filing.
“It’s a space that’s been consolidating, and this is one of the better assets in my view,” Matt Kempler, an analyst at Sidoti & Co. in New York, said in a telephone interview. “You’re going to see bigger scale. Both companies service casino floors, so you’ll have a network of service.”
GCA’s offer follows a wave of mergers in the casino industry, including Gtech SpA (GTK)’s agreement to buy International Game Technology (IGT) for $4.7 billion in July. Bally Technologies Inc. (BYI) acquired SHFL Entertainment Inc. for $1.3 billion last year.
Robert Shore, an analyst at Union Gaming Group LLC, said it’s not a surprise that there’s another deal pending -- yet he’s surprised to see GCA as the buyer.
“GCA isn’t a slots company, they’re a processing company,” Shore said in a telephone interview from Las Vegas. “They have synergies with slots, but I’m not sure how it’s going to work out. I thought it would be a bigger slots company.”
GCA said the deal is expected to create about $30 million in synergies and to generate about $800 million in revenue based on the 12 months through June 30 and $217 million in adjusted earnings before interest taxes, depreciation and amortization.
Bank of America Corp.’s Merrill Lynch is providing financial advice to GCA and Pillsbury Winthrop Shaw Pittman and DLA Piper are giving legal counsel. Wells Fargo & Co is providing financial advice to Multimedia and Latham & Watkins is giving legal counsel. The transaction is expected to close in early 2015, pending regulatory approvals.
Multimedia soared 29 percent to $35.78 at 11:20 a.m. New York time. GCA rose 1.9 percent to $7.66.