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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Gaming regulators approve buyout of Multimedia Games by Global Cash Access

19 December 2014

LAS VEGAS -- The $1.2 billion buyout of slot machine maker Multimedia Games, Inc. by Global Cash Access was approved Thursday by the Nevada Gaming, which allowed the transaction to clear its final regulatory hurdle.

Global Cash Access provides casinos with ATMs, point-of-sale and debit-card transactions and offers slot-machine ticket redemption and jackpot kiosks. The company processes about 90 million transactions annually, dispensing more than $19 billion in cash.

The purchase of a slot machine maker allows Global Cash Access to expand beyond its current business model and provide different product lines to its casino customers. Global Cash CEO Ram Chary said the merger would also open more paths for Multimedia Games to enter new jurisdictions.

Chary said the Global Cash corporate headquarters would remain in Las Vegas. Game design and manufacturing will remain in Austin. He said very few job reductions would happen because of the merger, which is expected to provide $35 million in annual cost savings.

Global Cash Access has more than 300 gaming licenses worldwide, a figure similar to slot machine giants Bally Technologies, Inc. and IGT - International Game Technology. Multimedia Games has fewer than 100 licenses and was itself licensed in Nevada in late 2012.

Multimedia Games stockholders, who will receive $36.50 per share in cash from Global Cash Access, approved the deal on earlier this month. The price is a 31 percent premium to the company’s Sept. 5 closing price.

The slot machine maker, headquartered in Austin, Texas, with a sales and marketing office in Las Vegas, is considered one of the gaming industry’s top turnaround stories of the past few years. The company was close to being shut down in 2010, but refocused and expanded across the U.S. Multimedia Games stock price is now 10 times what it was in 2010.

Multimedia Games took casino floor space away from the big companies — IGT, Bally, WMS Industries Inccorporated — while its share price increased. Multimedia Games this year spent $13 million for PokerTek, Inc., an electronic table game company.

Wall Street analysts pegged the company as a takeover target following this summer’s two major merger announcements.

Last month, lottery giant Scientific Games Corporation completed its $5.1 billion buyout of Bally Technologies. Italy-based lottery company GTECH Holdings expects to complete its $6.4 billion merger with slot machine maker International Game Technology early next year.
Gaming regulators approve buyout of Multimedia Games by Global Cash Access is republished from Online.CasinoCity.com.