Slot and table game maker PlayAGS could be the latest gambling company to go private, something that has become a trend in the industry. The company announced that its board of directors had approved a $1.1 billion sale to private equity firm Brightstar Capital Partners. The $12.50 per-share sale represents a 40% premium over PlayAGS’s stock price on May 8, the day of the announcement.
David Lopez, CEO & President of PlayAGS, said the deal gives shareholders a compelling value, and the partnership with Brightstar will start a new chapter for the company.
With Brightstar’s resources and strategic guidance, we believe AGS will be well-positioned to make targeted investments in R&D, top talent, operations, and industry-leading innovation, which should accelerate our global footprint.
A Short But Eventful Stint on Public Markets for PlayAGS
If approved, Brightstar’s purchase of PlayAGS will be completed in the second half of 2025. That will mark the end of about seven years of public trading for the company’s stock.
Apollo Global Management bought AGS (then known as American Gaming Systems) in 2013 for $215 million. Apollo invested an additional $100 million in equity to transform it into PlayAGS. Apollo decided to take PlayAGS public five years later, spinning it off with an $18.50 share price.
PlayAGS immediately encountered volatility in its price, as is often the case with companies making their debut on public markets. After a few months, the stock price had risen to over $32. Soon, however, it began to drop rapidly. In 2020, it bottomed out at $1.44 per share, less than 5% of its value at its peak.
The price bounced back but remained under $10, save for a brief moment in 2021. In 2022, Apollo ended its relationship with AGS and sold its remaining 22% stake in the company.
Brightstar is the second company to make a bid for PlayAGS since Apollo cut ties. In 2022, Inspired Entertainment, known for virtual sports, offered to buy PlayAGS for $10 a share. The offer appeared to be a case of bargain shopping, coming a month after AGS’s stock had once again fallen below $5 a share. However, the board of directors rejected the offer. It’s a move that seems wise in retrospect now that they’ve received a bid 25% higher by waiting two years.
Announcement Has Triggered Several Investigations
In the press release, PlayAGS said that it will not release its Q1 2024 results due to the acquisition agreement. These had been scheduled for the following day, May 9. While Lopez believes the acquisition will please shareholders, PlayAGS is facing security law violation investigations and potential lawsuits by several law firms, including:
- Halper Sadeh LLC
- Brodsky & Smith
- Rowley Law PLLC
The investigations focus on whether the PlayAGS board of directors failed to meet its duties to shareholders. Those duties include determining whether the Brightstar acquisition represents a fair value to shareholders and disclosing all information needed for shareholders to make their own assessment.
Potential Acquisition Follows The Industry Trend
Analyst David Bain of B Riley Securities has been following PlayAGS closely and says he believes that if the sale closes, the company’s leadership will likely remain the same. He also thinks the company will likely continue to grow organically. Bain adds that he wouldn’t be surprised if AGS returns to the stock market via IPO when the market is more favorable.
This yo-yo-ing of companies between public and private ownership is becoming a trend in the US gambling industry. The boom period of 2019 to 2022 saw many companies seeking to go public. Now that the industry is facing headwinds, companies are seeking shelter from shareholder pressure and the volatility of their own stock prices.
Last month, another content and technology provider, Bragg Gaming, announced that it is considering a potential sale. Before that, Rush Street Interactive, the parent company of BetRivers and PlaySugarHouse, likewise announced that it was looking for buyers. Its time as a public company would be even shorter than PlayAGS’s, as it only spun off from parent Rush Street Gaming in 2020.
Finally, there’s Bally’s, which has a concrete offer on the table. In March, Standard General, a minority shareholder, offered to buy the remaining shares of Bally’s for $15 apiece. That was Standard General’s second attempt to acquire Bally’s and looks unlikely to go through, as another minority shareholder has reacted to the proposal with hostility.
The low stock prices and eagerness to get off public exchanges have made this a buyer’s market for better-positioned companies. Some examples of recent high-profile acquisitions include:
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