Private Equity Firm Acquires PlayAGS – Merger Arbitrage Mondays

  • May 13, 2024
PlayAGS (AGS): $11.29 Market Cap: $445.44M Deal Size: $1.1B In a slow week for M&A activity, two billion dollar deals were announced, including the acquisition of gaming equipment supplier PlayAGS (AGS) by middle-market private equity firm Brightstar Capital Partners. The deal is an all cash deal worth $1.1 billion and shareholders of PlayAGS will receive $12.50 per share in cash. Brightstar paid a hefty 41% premium to acquire the company. PlayAGS is a supplier of slot machines, tables, and other interactive casino products and has a leveraged balance sheet with nearly half a billion in net debt on the balance sheet. The stock was already up 76% over the last year before news of this deal hit the wires. The company has seen revenue grow consistently but bottom line profitably has been elusive with the company operating at or close to break even the last eight quarters. The part about this deal that surprised me the most was not that the spread on this all cash deal by a private equity firm is 10.72% but that the company expects the deal to close in the second half of 2025. The initial termination date provided in the merger agreement is May...

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