Late Sunday, Australian gaming simple machine Aristocrat Technologies proclaimed it’s purchasing competition Playtech inward a $3.71 one thousand million transaction. That values the direct at a 58 percent insurance premium to where it closed in(p) finally Friday. At to the lowest degree i psychoanalyst believes the deal highlights potential opportunity with gaming technology provider GAN Ltd. (NASDAQ:GAN).
B. Riley analyst David Bain says the premium Aristocrat is paying to gain Playtech, which has a similar business poser to GAN, could live suggestive of valuation chance with GAN.
We believe the sell further demonstrates scarceness economic value of both business-to-business (B2B) technology and content, highlighting valuation of GAN and a handful of other B2B/business-to-consumer (B2C) gaming engineering and content suppliers in the space, which continues to control super heavily M&A (mergers and acquisitions) activity,” said Bain inward a line to clients today.
The analyst rates GAN “buy” with a $26 terms target, implying upside of 71 percent from the Oct. 15 close.
GAN Has Scarce Assets
Shares of GAN, which, same Playtech, makes gaming-related computer software that propels iGaming and sports wagering platforms, are away 25 percent year-to-date. But the company’s technological capabilities remain alluring.
That’s even more true up at a clip when much of the consolidation inward the online gaming industry is revolving around buyers getting their custody on engineering to fort their in-house tech stacks. That’s exactly what Aristocrat is doing inwards getting Playtech. The UK-based direct makes package for net casinos, web-based poker game rooms, and online sports wagering, and provides computer software for fixed-odds colonnade games and online games.
While GAN isn’t yet generating bombinate as a potentiality takeover target, it’s clear some buyers are pursuing targets for engineering assets. There’s speculation that it’s tech DraftKings (NASDAQ:DKNG) wants inwards its overtures toward Entain Plc (OTC:GMVHY). As another example, Bally’s (NYSE:BALY) recent purchases of Gamesys and Bet.Works reassert gaming operators are keen on vertical integrating and need to land tech in-house to realise cost efficiencies.
As for GAN, its market place capitalisation of well-nigh $640 million makes it easy digestible for any keep down of suitors. But the Irish Gaelic society hasn’t been direct tied to takeover rumors.
Another Reason to Like GAN
There are no guarantees that a suer testament come calling for GAN, but B. Riley’s Bain says on that point are other reasons to look at the shares, including a recently proclaimed deal with Red River Rock Resorts (NASDAQ:RRR) the investment funds community may live overlooking.
Last week, GAN said it inked an conformity with the gambling casino manipulator “to establish and deploy the infrastructure for Station’s ‘STN Sports’ online sports platform, peregrine applications, and retail Over-the-Counter and Kiosk-based sports betting throughout Nevada.”
“We believe the correspondence validates elements of GAN’s Coolbet technology, which testament live incorporated into the multiple elements of the deal. Given the RRR arrangement was announced tardily inward the daylight (Friday), and not discussed on its Analyst Clarence Day call, we trust it may experience been unmarked by investors,” said Bain.
The analyst raises 2022 and 2023 sales estimates on GAN to $176.2 one thousand thousand and $225.3 million, respectively, from $159.2 million and $187.3 million.