VGW shareholders back Laurance Escalante's bid to take firm private

Shareholders of Virtual Gaming Worlds (VGW) have approved a takeover offer by company founder Laurance Escalante, paving the way for the Australian online gaming firm to go private amid mounting regulatory scrutiny in the United States.

At a shareholder meeting held on August 1, 85.04% of attendees, including 91.31% of minority shareholders, voted in favor of Escalante's offer to acquire the 30% of VGW shares he does not already own. 

The A$5.05 ($3.26) per share bid falls within the A$4.53–5.63 valuation range provided by Kroll Australia and marks a premium to his initial November 2024 offer of A$3.50–4.00 per share. The deal values the company at A$3.2 billion ($2.1 billion).

Pending court approval expected on August 5, the scheme is slated to become effective the following day, with full implementation scheduled for August 20. The transaction will be conducted via Ocean BidCo Limited, a Guernsey-based special purpose vehicle. Minority shareholders may elect to receive cash, shares in Ocean BidCo, or a combination of both.

The outcome brings an end to what has been a fraught relationship between Escalante and minority shareholders. Tensions had escalated in recent months over concerns about VGW’s governance practices, valuation, and regulatory risks, particularly in the U.S. Shareholder discontent was further stoked by Escalante’s reported outburst at investors, in which he told them to sell their shares if they lacked confidence in his leadership.

Some investors also flagged potential conflicts of interest tied to his involvement in Kickr Games, a social gaming platform perceived as competing with VGW’s brands.

VGW has faced growing challenges in the U.S. due to tightening regulations on its dual-currency sweepstakes model. The company has exited 11 states, including Mississippi, New Jersey, Connecticut, and Delaware, as well as New York and Nevada, following legislative and enforcement action.

Its brands - Chumba Casino, LuckyLand Slots, and Global Poker - are also not available in Idaho, Michigan, Montana, and Washington. Legal proceedings are ongoing in Alabama, with further regulatory risk in Maryland and West Virginia.

Despite these pressures, VGW has posted strong financial results. The company reported A$6.1 billion ($3.94 billion) in revenue and A$491.6 million ($317.75 million) in net profit for the fiscal year ending June 2024, up 27% and 33% year-over-year, respectively. VGW forecasts FY2025 profit in the range of A$555 million to A$570 million, based on expectations that second-half results will mirror the first.

Escalante has argued that taking VGW private will allow the company to better navigate regulatory risks and operate with greater flexibility. The move also removes the need to publish Australian financial statements due to Ocean BidCo’s incorporation in Guernsey. Nonetheless, he has committed to maintaining an Australian tax-paying entity and remaining domiciled in the country.