Evolution Group Looks for M&A Opportunities in Live Dealer Industry

According to a recent report from Eilers & Krejcik Gaming (EKG), Evolution Group is carefully assessing its position and considering mergers and acquisitions as competition in the US live dealer industry intensifies.

While Evolution has been successful in the North American live casino market, it has encountered challenges with its random number generators (RNG). To maintain its market position, the company has had to make strategic decisions in response to these issues. This has included acquiring companies like NetEnt in Europe and Asia, as well as Ezugi in the early stages of the US live casino industry.

EKG’s report highlights Evolution’s potential interest in the online arm of International Game Technology (IGT). IGT, a significant player in the gaming industry, has been exploring strategic options for its global gaming and PlayDigital units. Acquiring IGT’s internet business could position Evolution as a formidable player in the live dealer space.

However, both Evolution and IGT have experienced declines in their market shares, raising concerns among investors. According to EKG’s data, Evolution’s market share, which was previously at 28%, has dropped to 21% in less than a year, while IGT’s share has fallen from 22% to 17% in the same timeframe.

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With a market valuation of nearly $19 billion, Evolution is more likely to be a buyer than a seller in the current environment, despite these challenges. The Swedish company may need to restructure its operations in Asia and the gray market to attract potential buyers, even if there may not be many interested parties. This could involve involvement from private equity groups.

In addition, Evolution announced robust financial results for the third quarter, with operational sales reaching €452.6 million ($476.9 million), a 19.6% increase from the same period in 2022. The company’s operating profit increased by 21.5% to €287.1 million ($302.5 million) in the third quarter, while its EBITDA rose by 22.1% to €318.6 million ($335.9 million).

Evolution achieved an EBITDA margin of 70.4%, attributing its performance to high demand and cost-effective strategies. The company plans to focus on expanding its network and meeting the growing demand for live casino products by establishing new studios in Europe, Latin America, and North America.

Industry analysts predict consolidation in the iGaming sector, including live dealer offerings. Given the likelihood of further mergers and acquisitions in the industry, Evolution may actively pursue acquisitions to fortify its position and defend against potential unsolicited offers.

Source:

, igaming.org, November 6, 2023.