Market confidence in Swedish gaming supplier NetEnt has risen considerably following its £220m ($272.1m) acquisition of Red Tiger Gaming.
After last week’s announcement, Gambling Insider posed the question of whether the M & A will solve NetEnt’s existing problems.
But investors have so far reacted well to the deal, with the company’s share price up from SEK 25.60 ($2.63) at the close of trading last Wednesday to around SEK 33.00 this week.
A financial analyst told Gambling Insider: "As you can see from the share price, it’s been quite well received. It’s up 30% in one week. It was on a five-year low before that. It’s come from a quite depressed share price level."
Investors have so far recognised the strategic benefits of the merger, with Red Tiger boasting market share in both Asia and the UK, suiting NetEnt’s current aims.
At the same time, the acquiring supplier provides Red Tiger with a strong presence in the Nordic countries, as well as a bridge into the US.
Top-line synergies are expected and the market can equally see the need for consolidation in the slot supplier industry, where smaller firms face steep costs and tight regulation.
A financial analyst explained: "NetEnt has had negative organic growth for two quarters and, with the inclusion of Red Tiger, which I think is growing 50% plus, the mix of those two will return NetEnt to organic growth.
"Perhaps not Q3 but from Q4 onwards and definitely from 2020, it’s going to look a whole lot better for NetEnt.
"On top of Red Tiger, NetEnt’s also making a push into live casino and in the US in general. All in all, it should definitely return to pretty good growth next year.
"It could be a turning point for NetEnt both operationally and from a share price point of view."