Apollo Global Management, the private equity firm that was formerly the parent company of gaming supplier PlayAGS, has liquidated its 22 percent stake in the now-public supplier, commonly referred to as AGS.
Apollo is the largest shareholder in AGS, which has grown to one of the industry’s major suppliers of slots and table-game technology.
AGS announced on November 14 that it was selling the 8.2 million shares controlled by Apollo, with the proceeds to go to the equity firm. It did not provide a reason. The following day, AGS shares plunged by 13.39 percent on volume that was more than 20 times the daily average.
The drop in AGS stock is similar to what happened two months ago when talks with Inspired Entertainment over a potential takeover broke down. According to Casino.org, there was speculation that Apollo may have loomed large in those discussions, although that was never confirmed.
“The announcement follows a Q3 earnings report that, while seemingly right down the middle, was met with a -21 percent decline in the shares the following day,” wrote Stifel analyst Jeffrey Stantial in a report to clients, as reported by Casino.org.
“AGS has partially recovered, though still -11 percent,” said Stantial. We have yet to hear of anything credible justifying the sell-off from a fundamentals perspective, though the timing of the secondary sale shortly thereafter could potentially draw scrutiny.”
Stantial did, however, note Apollo’s sale removes a “longstanding overhang” from AGS stock, which often traded at deep discounts relative to peers due to the private equity firm’s position in the shares. The analyst added Apollo’s sale was likely more “mechanical” than anything else, as the financial company has been involved with AGS for a decade and its remaining stake was small.
“Apollo’s 22 percent ownership has been a lingering investor hang-up,” Truist Securities gaming analyst Barry Jonas wrote in a research note. “We think its exit could attract incremental investor interest.”
Apollo previously owned Caesars Entertainment but sold the holdings in 2019. Apollo paid $2.25 billion for the operations of the Venetian, Palazzo and Venetian Expo in February as part of a $6.25 billion purchase from Las Vegas Sands Corp. Real estate investment trust VICI paid $4 billion for the land and buildings.
