The Nevada Gaming Commission Thursday approved affiliates of Brightstar Capital Partners to acquire PlayAGS as part of a $1.1 billion deal in which Brightstar hopes grow AGS’s business globally.
The approval from regulators comes 13 months after the announced deal between the global gaming supplier of slot, table, and interactive products with Brightstar, the middle-market private-equity firm focused on investing in industrial, manufacturing, and services businesses. The deal is expected to close in the early third quarter.
AGS shareholders will receive $12.50 per share in cash, a 40% premium to the company’s closing price on May 8, 2024.
The approval process before the Commission Thursday and Nevada Gaming Control Board earlier this month went smoothly. The Commission also approved the licensing of Andrew Weinberg, founder and CEO of Brightstar, and David Lopez, longstanding CEO and president of PlayAGS.
Ten-year-old Brightstar is a new player in the gaming industry. Apollo Global Management acquired an ownership stake in AGS in 2013 and took it public in 2018, before selling its shares in 2022.
Brightstar has 60 employees and the companies it controls have more than 25,000 across the country. Like Apollo, the firm represents a number health-care and educational organizations, pension plans, and family offices, Weinberg said.
The Brightstar team is a blend of investors and operators, though it’s not looking to run PlayAGS; they consider Lopez a “fantastic” CEO, Weinberg said.
“I met David Lopez two years ago and I was impressed,” Weinberg said. “Clearly, he’s been a strong member of the industry and incredibly well regarded. He’s recruited a talented team, quite important in a CEO. We saw an opportunity to reward shareholders in what we thought was an undervalued business and at the same time generate a return for our own investors.”
Weinberg said they’ve spent time with PlayAGS management at their headquarters in Las Vegas to understand their strategy “and the go-forward opportunity, which we think is significant. The landscape continues to change, but we think it changes in our favor and will continue to support David and the team as board members and owners to pursue growing the business, which should result in job growth, economic opportunity, and expansion opportunities.”
Lopez said PlayAGS has about 1,000 employees. When the company was acquired by Apollo, nearly 100% were based in Oklahoma where the business started. Today, 15%-18% are based in Las Vegas, with offices in Israel, Australia, Austin, Reno, Atlanta, and Arizona.
With Brightstar’s resources and guidance, Lopez maintains that AGS will be well-positioned to make targeted investments in research and development, top talent, operations, and industry-leading innovation, which should help accelerate its global footprint.
“When I joined AGS, it was owned by Apollo and the goal was to become an international diversified gaming supplier,” Lopez said. “At the time, we were primarily in Oklahoma. I don’t recognize the company I joined at the time. Our investment is to expand our product line around the world. Most of the growth will come either here in Las Vegas or one of the other domestic locations.”
Weinberg said he’s had involvement with gaming going back 30 years when he was at Morgan Stanley assisting the Primm family with the sale of their two assets at the Nevada state line to MGM Resorts International. In banking, he’s worked on other transactions in the gaming sector.
“I’ve been in and around the industry,” Weinberg said, “and “I appreciate the opportunity in Nevada, an incredibly business-friendly state.”
The deal received praise from Commission members.
“This is a compelling transaction,” said Commissioner Brian Krolicki. “I’m excited to see another face here bringing in investment capital and creating opportunities and preserving existing opportunities. I see the value you’re bringing here.”
