The atmosphere vibrated today with high stakes, high finance, and rapid-fire transactions. Why, you might wonder? Shares of the innovative slot machine manufacturer, PlayAGS, listed on the New York Stock Exchange as AGS, rocketed up by a whopping 26.56%, all on trading volume that stood at a staggering 35 times the daily average. This surge came right after an announcement by PlayAGS that it had reached an agreement to be acquired by Brightstar Capital Partners in an astounding $1.1 billion deal.
In the echoes of ringing slot machines and the fast-paced world of finance, two factors are intertwined. The slot machines that PlayAGS is known for, shown above, will soon be marching to the beat of Brightstar Capital. This private equity firm has valued PlayAGS at a stunning $12.50 a share—this evaluation dramatically is a 41% premium to the stock’s volume weighted average share price over the last 90 days. Equally impressive, it’s also 40% above where the stock was when it closed on May 8. Bravely forging ahead against all odds, PlayAGS closed at $11.34 today.
Reacting to this major development, PlayAGS’s Board of Directors took a unanimous stand. They approved this game-changing acquisition and wholeheartedly recommended that their stockholders do the same. It has been relayed that AGS shareholders can anticipate a cash payment of $12.50 per share on agreeing to this momentous union, according to a statement from the firm, which proudly calls Las Vegas its home.
Breaking the suspense, it is expected that this complex transaction will close in the second half of the current year.
The changing sands of the gaming world are rife with whisperings of takeovers, but PlayAGS stood away from such rumors until now. Brightstar’s audacious deal for the company caught several market observers unawares. Among them was Stifel analyst, Jeffrey Stantial, who admitted candidly that PlayAGS’s takeover was a twisted surprise he had not penciled in on his 2024 bingo card.
Earlier in the day, in a note to his clients, Stantial weighed in that PlayAGS’s share price had long been separated from the company’s successful performance statistics. However, he stated, “with the benefit of hindsight,” the firm’s operational improvements over the past few years made it an enticing buyout candidate for a private equity firm like Brightstar.
Unexpectedly, PlayAGS agreed to be swooped up this year, but this isn’t the first time PlayAGS has been at the crossroads of acquisition negotiations. A few years ago, in August 2022, Inspired Entertainment stretched out an offer of $10 a share for AGS, but that prospective deal crumbled just a month later.
PlayAGS’s liaison with Brightstar isn’t its first association with private equity either. In 2013, PlayAGS was courted by Apollo Global Management, as who bought American Gaming Systems (AGS) for a tidy sum of $215 million. This firm later morphed into what is now known as PlayAGS, making Apollo the most substantial investor in the company, a stake they liquidated in late 2022.
Now, it seems New York-based Brightstar is making an entry into the gambling scene. Garnering Brightstar’s first footnote in gaming, the AGS purchase doesn’t reflect any current or previous ties to the industry. Stifel’s Stantial went on record saying that Brightstar has secured financing for the deal, and it’s likely to be easily approved by PlayAGS shareholders. However, some regulatory hurdles may still need to be addressed, such as Brightstar having no licensing.
In the final analysis, the deal completed today great melds the luck of the draw from the gaming world and the high-risk world of finance. It serves as a reminder that stakes can change with a roll of the dice.
