What happened
NeoGames (NGMS 0.07%) stock soared above the market's returns on Monday, rising more than 110% compared to a flat S&P 500. That boost put the digital lottery, gaming, and sports betting platform up roughly 129% so far in 2023, compared to a 7% gain in the wider market. Yet, shares are still far off the highs they set during the pandemic.
Monday's rally was powered by news that NeoGames struck a deal to be acquired at $29.50 per share.
So what
Over the weekend, NeoGames' board of directors announced that they reached an agreement with Aristocrat Leisure, valuing the company at roughly $1.2 billion, or an over 100% premium. Most shareholders will be thrilled at that quick return, given that NeoGames reported net losses in the past quarter and for the full 2022 fiscal year. Yet its revenue base is expanding quickly, and NeoGames reached much higher valuations at times during the pandemic.
Still, management described that deal as a clear win for shareholders and for the NeoGames platforms. "We are delighted that the team at Aristocrat recognizes the significance of what we have built," CEO Moti Malul said in a press release.
Now what
The stock's share price remains below the proposed $29.50-per-share buyout price. That gap is due to uncertainty about whether the deal will go through, and when it might close.
The purchase must win regulatory approvals in addition to meeting other contingencies like the approval of NeoGames' shareholders. It might take as much as a year before all of these conditions are met, management estimates.
Still, it seems likely that NeoGames will soon become part of a larger entertainment giant. Shareholders' stock at that time will be automatically converted into cash at the agreed-upon price of just under $30 per share.