Global Cash Access edges closer to buyout of Multimedia Games

8 December 2014

LAS VEGAS -- Global Cash Access on Thursday moved a step closer to completing its $1.2 billion buyout of slot machine maker Multimedia Games, Inc.

The Nevada State Gaming Control Board unanimously recommended approval of the deal following a hearing in Carson City. The Nevada State Gaming Commission will rule on the matter on Dec. 18.

Global Cash representatives told regulators Nevada’s sign-off on the merger would be the final approval needed to close the deal, which was announced on Sept. 8.

Control Board members had very few questions about the transaction that merges the cash services company with a slot machine maker.

“This transaction is well-structured and well-financed,” said Control Board member Terry Johnson. “It’s a good move for Nevada.”

Global Cash Access provides casinos with ATMs, point-of-sale and debit-card transactions and offers slot-machine ticket redemption and jackpot kiosks. The company processes about 90 million transactions annually, dispensing more than $19 billion in cash.

The purchase of a slot machine maker allows Global Cash Access to expand beyond its current business model and provide different product lines to its casino customers. Global Cash CEO Ram Chary said the merger would also open more paths for Multimedia Games to enter new jurisdictions.

Chary told the Control Board cash would always be part of the gaming business and the company would be looking for “better ways” to help casinos manage cash. Also, he said the slot machine industry will need to develop technology that makes more attractive to a younger demographic.

“We appreciate the thoughts and ideas and look forward to what the combined company will bring,” said Control Board Chairman A.G. Burnett.

Chary said the Global Cash corporate headquarters would remain in Las Vegas. Game design and manufacturing will remain in Austin. He said very few job reductions would happen because of the merger, which is expected to provide $35 million in annual cost savings.

“There will be cost savings in marketing efforts since we will no longer be two separate businesses,” Chary said.

Global Cash Access has more than 300 gaming licenses worldwide, a figure similar to slot machine giants Bally Technologies and IGT - International Game Technology. Multimedia Games has fewer than 100 licenses and was itself licensed in Nevada in late 2012.

Multimedia Games stockholders, who will receive $36.50 per share in cash from Global Cash Access, approved the deal on Wednesday. The price is a 31 percent premium to the company’s Sept. 5 closing price.

The slot machine maker, headquartered in Austin, Texas, with a sales and marketing office in Las Vegas, is considered one of the gaming industry’s top turnaround stories of the past few years. The company was close to being shut down in 2010, but refocused and expanded across the U.S. Multimedia Games stock price is now 10 times what it was in 2010.

Multimedia Games took casino floor space away from the big companies — IGT, Bally, WMS — while its share price increased. Multimedia Games this year spent $13 million for PokerTek, an electronic table game company.

Wall Street analysts pegged the company as a takeover target following this summer’s two major merger announcements.

Last month, lottery giant Scientific Games Corporation completed its $5.1 billion buyout of Bally Technologies. Italy-based lottery company GTECH Holdings expects to complete its $6.4 billion merger with slot machine maker International Game Technology early next year.

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Related Links
Nevada State Gaming Control Board
Nevada State Gaming Commission
IGT - International Game Technology

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