The gaming industry and everyone interested in the recent happenings are closely following the development of the controversial situation between Scientific Games Corporation and its plans for purchasing NYX Gaming and William Hill, a leading bookmaker based in the UK. The three well-known entities in the gambling world have been tangled in a heated argument in which each company is trying to prevail and defend its initial position. This is happening at the cost of both diplomatic strategies and straightforward court actions and it is definitely a story worth researching in-depth as it progresses and ultimately reaches a final decision.
It could be recalled that the electronic gaming machines developer Scientific Games signed a deal for acquisition of NYX Gaming Group which amounted to C$775 million (US$611 million) and in addition to this announcement the digital gaming provider headquartered in Las Vegas stated that it has signed an exclusive agreement with Scientific Games which is going to guarantee the development and distribution of a new sports betting platform across the United States. As listed in the said agreement Scientific Games is going to invest as much as US$30 million in the project and this will give it the exclusive rights for third-party distribution over the span of the next 10 years.
However, there is a company which is not so content with the course of events and this is one of the shareholders in NYX Gaming. William Hill is the bookmaker which makes for 25 percent of the gambling market in the UK and Ireland and it is also a minority shareholder in the Las Vegas-based gaming provider. Shortly after the news about the deal was announced, the UK bookmaker decided to pursue its best interest and convert its passive convertible preference shares into ordinary ones and thus guarantee itself the right to have its opinion heard regarding the future of the deal.
Scientific Games Becomes a Stakeholder in NYX
This conversion has to happen before 4th December this year and it will potentially give William Hill 32 percent of the voting stock in NYX. In response to this move, Scientific Games has opted for purchasing 10.72 percent of the stock in the digital gaming provider which amounts to some 11,600,000 ordinary shares which prices range from C$2.22 to C$2.35 per share, thus swelling the approximate total cost of the purchase to C$C$27 million. This was the first-ever purchase of Scientific Games in NYX and there have also been some alterations to the proposed merger of the two companies.
In order to operate under the new terms, the management of NYX has decided to drop deal provisions set on 20th September, requiring Scientific Games to purchase a minimum of 75 percent of the shares in the company in order to finish the acquisition process. There was also a change in the proposed merger agreement between the two companies. According to the amendment, if the acquisition of NYX is not approved by its shareholders, Scientific Games will have the right to make a contractual takeover offer for the business at the same initial acquisition cost which amounts to $631 million.
With this move NYX has also agreed to waive the existing standstill with Scientific Games, so that the latter could acquire any ordinary, preferred, or other equity securities of NYX or any of its subsidiaries. This decision comes as a result of the recent actions involving the UK-based bookmaker William Hill and its demands to convert its preference shares in order to gain an aggregate 31.9 percent equity in NYX Gaming. It is only a matter of time to witness what the course of events will turn out to be since 4th December is rapidly approaching and this is the deadline of the shares conversion which was given by William Hill.
As it could be recalled, both Scientific Games and NYX Gaming have filed separate lawsuits against the bookmaker with the claims that the company is trying to stifle competition in the US gambling market and this is not an environment which could encourage thriving gambling activities. The move is also in contravention of currently existing anti-trust laws in the US and as such should not be allowed to happen. In response to the accusations, William Hill opted for refuting all charges and it has stated that for the time being it is reviewing the potential takeover. However, a final formal position on the issue has not been made yet.
Stars Group Sells Its Share in NYX Gaming
In more recent news, 24th November brought the statement that Scientific Games have entered into a securities purchase agreement with Stars Group Inc. and one of its wholly-owned subsidiaries, Stars Interactive Holdings IOM Limited. As it is known, Stars Group is a well-known name in the gambling field and it is a provider of technology-based gaming and interactive entertainment products. With the new agreement between the entities Stars Interactive has agreed to sell all of its securities in NYX Gaming Group. It should be noted that among them are securities exchangeable into securities in NYX, which will furthermore benefit Scientific Games.
The securities for selling under the disposition are to the likings of 5.62 million ordinary shares of NYX, 40,000 preferred shares of NYX Digital Gaming (Canada) ULC, as well as 1.36 million ordinary share purchase warrants. This makes for a substantial part of NYX which will go in Scientific Games possession. As for the price of the said securities, the ordinary shares are being sold at a price of C$2.40 per share, while the preferred shares are also being sold at the same price. The ordinary share warrants, on the other hand, are being sold for no consideration. The overall aggregate consideration payable in cash will amount to C$35.50 million. Moreover, Scientific Games has inked the deal to pay Stars Interactive IOM a certain purchase price adjustment. This will have to happen in case Scientific Games acquires NYX fro consideration in excess of C$2.40 per ordinary share or it sells its securities of NYX for consideration in excess of C$2.40 per ordinary share.
As a result of the said transactions, now Scientific Games owns as many as 38,976,036 ordinary shares which is about 36.01 percent of the issued and outstanding ordinary shares of the company. In case all of the exchangeable preferred shares of Scientific Games are converted, it will own 48,150,400 ordinary shares, which equals approximately 41.01 percent of the ordinary shares of NYX. There are plans for future acquisition of additional ordinary shares or securities convertible into such in the future, as it had been confirmed by Scientific Games.
The dynamic between all entities involved in the acquisition of NYX Gaming has given a lot of food for thought to many experts in the gaming field. The next week is guaranteed to bring more news regarding the course of events and the final decisions of all stakeholders which have the right to have their opinion heard. Our team will continue following the development of the deals.