In a bid to further strengthen and increase efficiency, NetEnt has taken a bold step in announcing that despite the acquisition of Red Tiger Gaming (in 2019) exceeding all exceptions, 120 employees will be made redundant. Usually, if a company is not doing so well, staff will be made redundant, but to boast the deal was brilliant and still lay staff off is quite a shock to say the least.
“The acquisition has exceeded expectations and offers significant potential synergies, increased efficiency and economies of scale;” this means that restructuring will be implemented to speed up full integration within the NetEnt Group, including the relocation of several functions and the redundancy of 120 staff in Malta and Stockholm.
The award-winning software provider and constantly looking for ways to improve…
…all parts of their business in a bid to strengthen competitiveness and increase the value of the company. The overall process could see them saving SEK 150m in a cash-flow basis in Q2 of 2020. Based on this, the initial estimate of potential synergies from the original acquisition of Red Tiger will be around SEK250m – up SEK 100m per year.
Restructuring will cost SEK 25m its estimated and these costs will be documented as non-recurring items which will ultimately have a negative impact on operating profits for Q1 of 2020. The press release also highlighted how the company’s net debt will decrease:
“Today, NetEnt also announces that the earn-out consideration for Red Tiger will be redeemed through a directed issue of new shares and cash payment. Since this financial liability item was previously reported using the discounted net present value, the early redemption leads to an increase in financial costs of approximately SEK 35 million in the first quarter of 2020. This amount does not affect the cash flow. Following the rights issue, the company’s net debt will decrease by SEK 100m.”
The Covid-19 Effect?
With all that’s happening in the world, there is a lot of uncertainty. Playtech may have announced profits in online bingo and poker were up due to bored Europeans stuck at home, but with no work, no wages, how will the operators survive?
NetEnt have stated that the effects of Covid-19 are difficult to forecast, however, operations thus far have not been affected negatively.
The gaming group’s revenue has developed in-line with market expectations during Q1 of 2020 and are expected to fall between SEK 490m and SEK 500m. Therese Hillman, Group CEO of NetEnt said:
“We are now entering the next phase of the integration with Red Tiger, whose sellers are also becoming shareholders of NetEnt. The integration will unleash the full potential of our shared capabilities, create significant efficiency gains in games development and strengthen our position as the market leader in online casinohttps://www.twolittlefleas.co.uk/online-casinos/.”
Source: “NetEnt integrates Red Tiger to realize further synergies”. NetEnt. March 24, 2020.
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