GAN announces agreement to be acquired by Sega Sammy Creation for $107M

B2B technology and solutions provider Game Account Network (GAN) has announced a definitive agreement to be purchased and integrated into Sega Sammy Creation. As per the terms of the merger deal, SEGA Sammy Creation will pay $1.97 per GAN share, reflecting a 121% premium of its closing price at the end of trading on November 7th. 

In total, Sega Sammy Holdings, the Japan-based gaming heavyweight formed by the merger of Sega and Sammy Corporation, would acquire GAN for approximately $107.6 million. The Asian company believes acquiring GAN will help it expand its gaming business and wider portfolio, with a focus on the US iGaming market, which Sega Sammy believes is home to "promising" growth opportunities.

Interim CEO of GAN Seamus McGill, in a press release, noted that this premium, as well as the “slower than expected adoption of regulated online gaming in the US”, were key factors in accepting this deal, with the market offering less growth than it would have anticipated.

"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," said McGill.

"Sega Sammy has those resources and GAN is a strategic complement to their existing gaming portfolio. We believe this all-cash offer, at a substantial premium to recent trading prices, is the value-maximizing path for our shareholders.”

The closure of the deal is subject to shareholder approval in a vote that will take place before the end of Q1 of 2024. The board of directors has recommended that shareholders approve the deal, explaining that the $1.97 per share price represents fair value and that the merger is in the best interests of the company.

Should the deal secure all required approvals, Sega Sammy expects to close the acquisition before the end of 2024. In August, the business purchased Rovio Entertainment, the developer behind the Angry Birds franchise, for $774.6 million.

McGill took over as CEO of GAN in September when the previous boss, Dermot Smurfit, left the company with immediate effect after more than 21 years at the helm. Smurfit retains a large shareholding in GAN and a consultancy role. 

GAN, in addition to providing B2B gaming platforms, also operates B2C gaming operations, which were enhanced by its acquisition of CoolBet in early 2021.

However, the operator was among the first to withdraw from the regulated Ontario market, and GAN observed that the fierce competition and concentration of market share with a small number of operators demanded more money to operate.