For shareholders, buying and selling at the right time is the key to a successful business strategy. For Canadian-based gambling software giant Amaya Gaming, the shareholders are the beating heart of the company, and keeping them happy can be the difference between a long and profitable relationship, or a quick and painful demise. Amaya has made some big moves recently, and another may be on the horizon as the company is undergoing a strategic review to consider the sale of its US-based slot machine division, Cadillac Jack.
Amaya first acquired the Cadillac Jack brand in 2012 for approximately $177 million. At that time, the Duluth, Georgia based company was developing Class II and Class III gaming machines for moderately sized land-based casinos and bingo halls. In the last two years, under the wing of Amaya Gaming, Cadillac Jack has increased its manufacturing to include a wider range of games for a larger variety of businesses. The brand has also ventured into the online casino software development industry by converting some of its most popular mechanical creations to analogous internet variations.
Late last month, Amaya issued a statement that the company was exploring its options in terms of the Cadillac Jack subsidiary by entering into a strategic review process. The primary goals would be to maximize value for their shareholders, while at the same time, advancing the growth of the Cadillac Jack brand. If reaching that goal means putting the slot machine maker on the market, that’s the route Amaya will take.
“In light of recent consolidation within the gaming machine supplier industry,” stated David Baazov, Chief Executive Officer for the Canadian-based Amaya Gaming Group, “we believe that this is an appropriate time to review and evaluate potential strategic alternatives for Cadillac Jack.”
Consolidation has been the name of the game in the land-based and online gambling development business for some time now. Six months ago, Amaya was the centerpiece of the industry’s media when the company negotiated a deal to buy out Rational Group, the parent company of online poker giants PokerStars and Full Tilt, for $4.9 billion. In August, $3.7 billion changed hands when American-based slot machine manufacturer Scientific Games acquired Bally Technologies, more than doubling the size of Scientific. One month prior to that, another major slot machine maker, International Game Technology (IGT), was purchased by Italian competitor GTech SpA for $4.7 billion.
Amaya Gaming has consigned Macquarie Capital and Deutsche Bank to assist with the financial advisory process during the strategic review of its slot machine and electronic bingo subsidiary. Cadillac Jack has developed a portfolio of over 165 Class II and Class III gambling amusements and has approximately 13,000 machines installed across land-based casinos and bingo halls. The majority of the company’s clients signed a participation agreement to continue working with Cadillac Jack after the machines were installed, thus the company maintains a substantial amount of cyclical revenue for the long term; something buyers will surely see as a key selling point if and when Amaya Gaming takes the next step of entertaining bids on the slot machine maker.