AGS To Sell To Brightstar Capital Partners For $1.1 Billion

Steven Melendez

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Gambling equipment provider PlayAGS Inc. announced Thursday it has entered an agreement to be acquired by affiliates of private equity firm Brightstar Capital Partners for $1.1 billion.

“We are very pleased to reach this agreement, which we believe provides our stockholders with compelling, certain cash value,” said AGS CEO David Lopez in a statement announcing the deal. “Joining forces with Brightstar represents an exciting new chapter for AGS and our mission to provide exceptional gaming solutions for our operator partners. 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.”

The AGS board unanimously approved the deal, which would give shareholders $12.50 per share in cash,  a 40% premium to AGS’ closing price on Wednesday. The deal is awaiting shareholder approval.

Brightstar’s investment portfolio appears to include businesses in a variety of arenas, from vehicle auction services and logistics to pest control and vitamins.

The merger announcement came as AGS declared a roughly $4.3 million profit for the first quarter, after seeing a $334,000 loss in the same period last year. Revenue was up about 15% to roughly $96 million, with growth in both gaming operations — up approximately 6% to roughly $62.1 million — and equipment sales, which jumped about 38% to $33.9 million.

Three for three

Revenue also rose in each of the company’s three segments: electronic gaming machines (EGMs), including slots; table products, which includes proprietary games based around poker and blackjack as well as equipment like card shufflers; and interactive, comprised of a B2B iGaming catalog offered to casino operators and free-to-play social games offered directly to consumers.

“Our B2C social casino products earn revenue from the sale of virtual coins or chips,” read the company’s Thursday earnings filing. “B2B social casino products earn revenue primarily based on a percentage of the monthly revenue generated by the white label casino apps that we build and operate for our customers.”

Revenue from sales of electronic gaming machines rose about 39% to $33.5 million and revenue from gaming operations involving those machines rose around 2.6% to $53.8 million. The company sold 1,441 EGM devices in the first quarter, compared to 1,121 the same time last year.

“EGMs constitute our largest segment, representing 91% of our revenue for the three months ended March 31, 2024,” the company said in the filing. “In 2024, we had a library of over 550 proprietary game titles that we offer for delivery on our EGM cabinets.”

Interactive revenue grew 65% compared to the same period last year to about $4.2 million.

“The increase in [interactive] gaming operations revenue is primarily attributable to an increase in [real-money gaming] revenues from Canadian and the U.S.-based operators, offset by decreased revenue from international customers and our social casino revenues due to our decision to strategically refocus our resources on growth opportunities within the regulated North American [real-money gaming] market,” the earnings filing explained.

Top of the table

Table products also saw growth in both sales and operations. Table operations revenue rose roughly 11% to about $4.1 million, and table equipment sales revenue rose about 19% to $461,000.

“We believe that this segment will serve as an important growth engine for our company by generating further cross-selling opportunities with our EGM offerings,” the company said in its earnings filing. “As of March 31, 2024, we had placed 5,410 table products domestically and internationally. Based on the number of products placed, we believe we are presently a leading supplier of table products to the gaming industry.”

Andrew Weinberg, founder and CEO of Brightstar, praised AGS’s history of innovation in announcing the deal.

“We look forward to working with David and the AGS team to capitalize on opportunities by taking a long-term approach to creating value,” he said. “AGS has a strong pipeline of new products, and we believe the company’s innovative approach to game development provides significant potential for continued growth.”