GAN Searching for ‘Bolt-On’ Acquisitions as US iGaming, Sports Betting Take Off

Posted on: April 19, 2021, 08:09h. 

Last updated on: June 30, 2021, 10:07h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Gaming technology provider GAN Ltd. (NASDAQ:GAN) is looking for smaller acquisitions as it aims to hit $100 million in 2021 revenue.

Gan stock
GAN stock advertised at the Nasdaq market site. CEO Dermot Smurfit, Jr. says the company will consider small acquisitions. (Image: Nasdaq)

The UK-based company, which went public last May, is looking to bolster its menu as the US online casinos and sports wagering markets soar, creating demand from gaming operators for technology services. GAN provides enterprise software as a service (SaaS) solutions for online casino and sports betting platforms, primarily through its GameSTACK internet gaming offering.

In an interview with The Independent, CEO Dermot Smurfit, Jr. is on the hunt for smaller deals in the $5 million to $50 range as it continues to integrate its purchase of Coolbet. GAN completed the $175 million purchase of the European iGaming and sportsbook operator in January. That’s the buyer’s biggest buy to date.

It could be some small, bolt-on acquisitions which would typically be… anywhere from $5 million to $50 million, would be an obvious sweet spot range for us,” said Smurfit.

The GAN boss indicated it’s unlikely the company’s next acquisition will be as large as the Coolbet deal.

GAN Firepower for Deal Making

Owing to a strong balance sheet, Smurfit’s firm has wiggle room for purchases, particularly in the price range the chief executive is targeting.

The company funded the Coolbet buy with a mix of cash and equity. GAN stock is on a wild ride — slumping 35.14 percent over the past month, resulting in a year-to-date decline of 9.52 percent. However, that’s usable currency when it comes to buying smaller companies. Additionally, the company had $153 million in cash and no debt at the end of 2020, providing ample flexibility for deal-making.

“We will continue to invest in proprietary software development to bring Coolbet’s sports offerings and other critical product development to the market,” said CFO Karen Flores on the company’s fourth-quarter earnings conference call.

“We are well-capitalized to address this. And our key priorities are securing market share, entering new states as they legalize, delivering the best platform technology to the market and exploring opportunistic and accretive M&A.”

In the Independent interview, Smurfit did not mention specific potential targets, nor did he indicate the desired geography for acquisitions. GAN derives more than 80 percent of its revenue from US-based clients.

Strong Market Share

Broadly speaking, GAN isn’t a consumer-facing company, so it’s not a recognizable brand to many gamblers. It is, however, well-known to operators.

As much is confirmed by market share data. That indicates the company’s platform powered 21 percent of the US iGaming market last year, while accounting for 60 percent of the internet casino business-to-business supplier market, according to Flores.

That’s enviable positioning at a time when analysts view the US internet casino industry in its nascent stages and poised to deliver exponential growth over the next decade-plus.

Recent additions to GAN’s client roster include Churchill Downs and Wynn Resorts.