Novomatic to own 53 percent of AGT
The trend of consolidation in the slot supply sector over the past three years apparently has yet to end, as Austria’s Novomatic Group announced last week that gaming industry legend Len Ainsworth will sell his majority share in Ainsworth Game Technology to Novomatic for around $473 million.
Novomatic, the giant gaming manufacturer and operator whose Austrian Gaming Industries subsidiary has long dominated the European slot-machine market, has struggled mightily for the past few years to enter the North American gaming market, its Florida-based subsidiary Novomatic Gaming Americas failing to make significant headway into U.S. casinos despite the Austrian firm’s substantial expansion war chest.
Australian slot-maker Ainsworth, however, has made a big splash in the Americas under President-North America Mike Dreitzer, increasing North American revenues last year by 41 percent and unit volume by 30 percent as it completed a new 291,000-square-foot headquarters building in Las Vegas. Its A560 range of cabinets has been a big hit un U.S. casinos, with its slots consistently registering as top performers wherever they are placed. This was added to its big share of the market in its Australian home base and other markets around the world.
Under the agreement announced last week, Len Ainsworth will sell his 172.1 million shares, amounting to 53 percent of the company’s equity, to Novomatic at a price of $2.75 per share. The company’s shares closed at $2.12 the day of the announcement.
The company will hold an emergency general meeting of its shareholders within the next three months to seek approval of the deal. Ainsworth, currently executive chairman of the company, will remain as its chairman.
It is, of course, the second time the 92-year-old Ainsworth has founded a major international slot supplier, built it to success and ultimately sold his stake. He founded what is now Aristocrat Leisure Industries in 1953, after using equipment from his dental supply business to build his first slot machine. Over the ensuing decades, he built Aristocrat into the powerhouse of the Australian “pokie” business, and created a new genre of slot machine it the low-denomination, multi-line video slots that now dominate the industry.
Ainsworth’s Aristocrat revolutionized the slot business in the 1990s with the U.S. introduction of multi-line video in Indian casinos and in Atlantic City, a trend that would continue into the early 2000s with revolutionary new products like Hyperlink multiple progressives. By that time, though, Ainsworth himself was well on his way to his next venture.
In 1995, Ainsworth sold his stake in Aristocrat and founded Ainsworth Game Technology, building it in remarkably short time into a viable competitor for the entrenched market share of his former company. In the ensuing 20 years, Ainsworth—as energetic as ever in his travels to major trade events around the world through his 80s and into his 90s—gained shares of markets around the world as it grew its business, culminating in the establishment and growth last year of its U.S. business.
The privately owned Novomatic reported it will keep its stake in AGT at around 53 percent, and will keep Ainsworth’s ASX listing on the Australian Stock Exchange.
Ainsworth announced profit after tax at $33.1 million for six months ended December 31, 2015, a 4.3 percent decrease from the same period in 2014. Revenue increased 26.8 percent to $141.9 million, up from $111.9 million in the same period in 2014 and EBITDA increased 6.9 percent to $53.8 million, up from 50.3 in the previous year. International revenues grew 57 percent to $91.6 million.
Ainsworth told the Sydney Morning Herald he will donate “a large chunk” of his $473 million windfall from the sale to charity. “I take the view I’ve been lucky in life and I should share my luck with my family,” Ainsworth said. “I think medicine and universities would be the target. If you can find a cure to something, that is a big prize in itself.”
He also told the newspaper the sale to the European slot leader will assure that the second company he founded will last decades into the future. “It gives all the staff a guarantee the company will be there for the future,” he said. “I’m ambitious, of course, but I probably have 10 years rather than 40 years left on this planet.”
That would put him at 102, but after surviving prostate cancer in the 1990s and continuing his remarkable career into the new millennium, industry pundits have learned to never count the affable Australian gaming legend out.
