According to a Feb. 18 press release, Light & Wonder (L&W) will acquire Grover Gaming’s charitable gaming assets for $850 million in cash up front, along with a four-year earn-out structure worth up to $200 million. The deal is expected to close in the second quarter of this year.
On an investor call later that same day, L&W CEO Matt Wilson was clear in explaining that his company is bullish on the charitable gaming market. As legislative progress continues to stall out again this year, particularly for igaming, these established adjacencies have become increasingly lucrative and attractive.
“I think the most obvious way for us to drive the top-line growth of the Grover assets under our ownership is to deploy our RND arsenal on the charitable gaming sector,” Wilson told investors. “If you think about L&W over the last few decades, we’ve spent literally billions of dollars on RND. Building great franchises, game math, art innovations, all of these things across many different studios. Our intention is to turn that cannon directly on the charitable market.”
With regard to expansion, Wilson said Minnesota and Maryland are the next biggest priorities. He explained that L&W had explored entering the charitable market organically, but the fragmented customer base makes it difficult. Grover has 1,500 customers across five states versus L&W’s 700 customers across all of North America.
Analyst reactions were mostly positive. The team at Macquarie gave an “outperform” rating on the stock and titled their note “Finding their four leaf Grover.”
“LNW’s acquisition of Grover Gaming’s Charitable Gaming Assets adds a long-term growth driver through expansion into a new adjacency,” analysts said. “In the near-term, we remain confident that the $1.4bn 2025 EBITDA target remains achievable without contribution from this acquisition, driven by gaming momentum, double-digit igaming growth and steady SciPlay profitability. We forecast a 13 percent three year EBITDA CAGR (ex stock comp) to CY27 with earnings growth across all three verticals.”
Barry Jonas of Truist Securities was also on trend, entitling his note “Move over Big Bird.” Similar to Fantini, Jonas called the valuation “attractive” and noted the growth opportunities this will create.
“The acquisition of Grover Gaming’s assets enables LNW to leverage its content to new customers in the charitable gaming space which has high barriers to entry,” Jonas wrote.
