After stock of supplier Everi Holdings jumped 9 percent in after-hours trading last Wednesday, Bloomberg News reported that the company is working with a financial adviser to solicit potential buyout offers, including from private equity firms.
The following morning, SunTrust Bank gaming analyst Barry Jonas noted that Everi’s management has been open about its interest in merger activity, and Jonas told investors the remarks were “consistent with prior management commentary.”
According to CDC Gaming Reports, Jonas said much of the merger or spin-off speculation has focused on Everi’s financial transaction services division. Everi was formed when financial transaction equipment provider Global Cash Access acquired slot machine developer Multimedia Games in 2014 for $1.2 billion.
“Management has been clear that they and the board remain committed to evaluate any and all opportunities,” Jonas said.
“While merger and acquisition speculation has tended to focus on a potential sale/spin of Everi’s financial technology business, we see it natural that management would entertain offers for the whole business should that option best maximize shareholder value.”
Shares of Everi, traded on the New York Stock Exchange, closed the week at $11.73 after hitting a 52-week high of $12.24 on Thursday.
Jonas reiterated his Buy rating for Everi’s shares, saying, “We continue to see solid fundamentals in the games business, a ramping free cash flow profile driving deleverage, and potentially accretive tuck-in financial technology mergers and acquisitions, which should all help drive multiple appreciation.”
