Game manufacturer Light & Wonder has made a $1 billion purchase of North Carolina-based Grover Gaming, the latter announced on Feb. 18. The sale covers Grover’s and G2 Gaming’s charitable-gambling assets.
The bulk of the purchase price consists of $850 million in cash, due on closing. An additional fee of as much as $200 million will be paid on the achievement of unspecified financial milestones.
Privately held Grover, owned by CEO Garrett Blackwelder, was founded in 2013. It has an electronic pull tab installed base of 10,000 units in North Dakota, Virginia, Ohio, New Hampshire, and Kentucky. They operate under a recurring-revenue business model.
Grover is additionally licensed in South Dakota, Minnesota, Montana, Wyoming, West Virginia, Washington, Ontario, and Louisiana, according to Deutsche Bank. In 2024, it generated net revenue of $135 million and cash flow of $111 million.
The Light & Wonder purchase price represents a 7.1-cash-flow multiple. According to Deutsche Bank, Light & Wonder “expects to fund the acquisition through a combination of existing cash and debt financing.” It doesn’t expect its resultant leverage to exceed 3.5 times cash flow. Light & Wonder’s current debt-to-cash flow ratio currently stands at 2.9 times.
Jefferies Equity Research analyst David Katz called the deal a “modest positive” for the buyer. He said the deal “should provide LNW with access to an adjacent market, provide accretive growth, while maintaining leverage within its target range.”
Katz opined that Light & Wonder’s strategic rationale “makes sense and the deal does not impact the current metrics.” He cited growth in the charitable-gambling sphere, especially compared to Class III slot play, which isn’t burgeoning.
“Second,” he continued, “the acquisition should further leverage the R&D spend and other corporate infrastructure of LNW. Third, the profitability of the business appears high and therefore accretive to LNW, prior to any synergies.” The analyst noted that the anticipated cash-flow margins from Grover (82 percent) would be higher than those for any other Light & Wonder unit.
The terms of the agreement include a four-year consultancy for Blackwelder “to help drive the continued success of the business,” according to a company press release. A spring 2025 closing is anticipated.
Explaining the attraction of its newest asset, Light & Wonder CEO Matt Wilson said, “Grover Gaming is a leading player in charitable gaming, a category that has experienced significant growth in recent years. This transaction complements our position as the leading cross-platform, global games company by adding another compelling regulated adjacency to our profile.”
Replied Blackwelder, “Light & Wonder is an ideal partner for us, given our similar company cultures and dedication to innovation and customer service.”
Added Grover’s chief development officer, Kevin Morse, “The real winners are the charities and fraternals in these markets, because of the exciting game content L&W brings to the table.”
Goldman Sachs was the financial advisor for the deal. Light & Wonder will further discuss the acquisition in an investor call later on Tuesday.
