The transaction is expected to be completed imminently, but an additional amount of up to £23m could be included in 2022, subject to Red Tiger’s performance in the next two years.
Red Tiger’s EBITDA is expected to reach £18m for the full year 2019 and NetEnt’s income for Q3 2019 will include approximately SEK 55m ($5.7m) of transactions and financing-related costs.
NetEnt will pay an initial consideration of approximately £197m for 100% of Red Tiger shares, with the acquisition primarily financed through new debt facilities provided by Danske Bank and Nordea.
The supplier said the purchase gives it the opportunity to capitalise on its scalable technology to support future growth.
NetEnt reported revenue of SEK 837m for the first half of the year, dropping 3% year-on-year.
Operating profit for the year up to 30 June was SEK 256m, corresponding to a margin of 48%, with the supplier announcing profit after tax of SEK 240m.
The supplier highlighted weak development in the Nordic countries as an explanation for the poor results and while announcing its H1 figures said it would continue to invest in increased game production, a technical platform featuring more functionality and live casino.
Therese Hillman, Group CEO of NetEnt, said: “The Red Tiger transaction will provide significant revenue synergies across our markets worldwide.”
Gavin Hamilton, CEO of Red Tiger Gaming, said: “Accessing NetEnt’s distribution network and geographic footprint will unlock new opportunities for Red Tiger and will further accelerate our growth.
“At Red Tiger we’ll remain focused as always on driving further innovation and we are looking forward to working with NetEnt on how to leverage our combined capabilities to create new products that wow our customers.”
