Everi Holdings Tuesday announced a purchase agreement to acquire certain assets of Video King, a provider of integrated electronic bingo gaming tablets, video gaming content, instant win games, and systems. Everi will pay approximately $59 million at closing, subject to customary net working capital adjustments.
“Over the past several years, we have had great success with executing on acquisitions that grow our product capabilities and the markets we serve,” said Everi CEO Randy Taylor in a statement. “During this time, we have established a track record of successfully scaling up acquisitions that have delivered an attractive return on investment and helped drive strong cash flow. We are highly confident that by helping to elevate our current games, fintech and digital solutions with and adjacent to our established customer base, the acquisition of Video King will meet those same criteria and offer Everi with another lever for growth.”
Currently licensed in approximately 60 jurisdictions, Video King is expected to expand the addressable market for Everi’s digital gaming content. Subject to regulatory requirements, an estimated 20% of Video King’s installed base of portable e-gaming tablets may be enabled to provide players with traditional bingo games and Class II video poker, slots, and instant win games, as well as a digital wallet and loyalty products.
In 2022, Video King generated revenue of more than $25 million, primarily from portable electronic bingo tablets in Tribal and commercial casinos, charitable bingo halls, military bases, and cruise lines. Revenue also came from sales of bingo equipment and consumable products.
“We are confident that as part of Everi, Video King will be in a very strong position to expand our product offerings to provide our long-time loyal customer base new enhanced games for our Tribal, charitable, and military markets,” said Video King CEO and Co-founder Tim Stuart. “The combination of Everi’s games and other digital offerings with our strong electronic bingo base create a unique opportunity to accelerate future growth.”
The transaction is expected to be completed within 60 days, subject to customary closing conditions. The acquisition, which includes the majority of Video King’s assets, will be funded from existing cash on hand and is expected upon closing to be immediately additive to the company’s adjusted EBITDA and free cash flow.
“Video King provides Everi with an expansive new channel to deploy our growing catalog of digital igames, as well as enhance the player experience by incorporating our digital wallet and loyalty products, while adding a new source to generate recurring revenue,” said Everi Executive Vice President, Chief Strategy and Digital Officer Tim Richards. “With an expanding demographic audience looking to engage in increased social and leisure activities, we see a significant opportunity to collaborate with the Video King team to develop new gaming content and play enhancements to optimize player engagement and drive increased customer traffic.”
In a note, Truist Securities Analyst Barry Jonas wrote that the deal “should allow Everi to compete in a relatively underserved segment of the market.
“Management noted the acquisition will allow Everi to deploy its cashless wallet and igaming content across Video King’s 50K+ e-bingo tablet installed base,” Jonas added. “We think this transaction, which management expects to close near the end of Q2, fits with Everi’s strategy of focusing on smaller, tuck-in acquisitions (such as eCash, Venuetize and Intuicode) to leverage its scale.”
B Riley Senior Research Analyst David Bain wrote in a statement that the the transaction “can offer additional content and other offerings on the tablets, including i-gaming-like slot or class II content, creating a significant potential uplift of EBITDA generated from the units” for Everi. “We find the acquisition unique, competition light (relative to Everi’s main competitors), and potentially more accretive than at first blush, particularly over the longer term. Maintain Buy rating.”
