Australian manufacturer increases competitiveness
If anyone thought mergers and acquisitions in the slot sector were done, Australian slot manufacturer Ainsworth Game Technology is proving the M&A game is alive and well.
Ainsworth, the company founded in 1995 by slot-industry legend and Aristocrat founder Len Ainsworth, is buying into the U.S. market in a big way this year. Already a leader in its home base of Australia, where it trails only the entrenched Aristocrat in market share, and in other parts of Europe and Asia, the slot-maker has marked 2016 for a major push into North America.
With a new 291,000-square-foot North American headquarters slated for completion in mid-2016, Ainsworth is now moving to expand its market. Last week, the manufacturer announced that it will acquire South Carolina-based slot manufacturer Nova Technologies LLC, a mainly Class II supplier with a current installed base of 1,300 games in Indian casinos across 11 U.S. states.
Founded in 2004, Nova, in addition to its corporate headquarters in Greenville, South Carolina, has a major sales, support and marketing office in Tulsa, Oklahoma, from which it serves Class II casinos in all Native American markets.
While the company also produces Class III slots, it is the Class II recurring revenue that Ainsworth targeted. The acquisition of Nova’s Class II operations will instantly double the number of slots Ainsworth has in recurring-revenue operations in the U.S., to 2,600, as well as giving the Australia-based company a fast track into the Class II Native American market.
“This is an accretive acquisition, and a highly complementary addition to our North American business,” Ainsworth CEO Danny Gladstone said in a statement. “For these reasons, it makes both great strategic and financial sense for Ainsworth. The transaction allows us to enter Class II gaming in an immediate and significant manner. This deal represents a complementary extension of available product to the direct benefit of Ainsworth’s current customer base across the Americas.”
Ainsworth is reportedly paying $38 million to buy Nova Technologies. Gladstone, at a general shareholder meeting, warned shareholders of likely flat pre-tax profit for the first half of 2016, owing not only to acquisition costs and the completion of the new headquarters but to the low Australian dollar, which inflates the cost of gaming-machine components.
The announcement on profits resulted in a more than 6 percent drop in Ainsworth shares, which company executives have said should only be temporary.
The acquisition will bring Ainsworth’s total installed base in the U.S. to 4,400 units.
In other Ainsworth news, slot-maker announced that it received a credit approval for an AUD90 million (US$64.1 million) secured loan by the Australian and New Zealand Banking Group Ltd. The new banking facility will replace the current AUD30 million unsecured loan and be used to fund the acquisition of Nova, according to a report in GGRAsia.
Commenting on the deal, Ainsworth, who is the company’s executive chairman, said, “We have been disciplined and highly selective in our acquisitive growth strategy and we are now excited to have an excellent platform that we can substantially grow and develop over time.”
