Jim Murren Blank-Check Firm Acies Merging with MGM-Backed Playstudios in $1.1 Billion Deal

Posted on: February 1, 2021, 05:54h. 

Last updated on: February 1, 2021, 06:11h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Acies Acquisition Corp. (NASDAQ:ACAC), a special purpose acquisition company (SPAC) started by former MGM Resorts International (NYSE:MGM) CEO Jim Murren, is merging with social casino developer Playstudios, Inc.

Acies Playstudios
Former MGM CEO Jim Murren, seen here last year. His SPAC, Acies Acquisition, is merging with Playstudios. (Image: KTNV)

The transaction values the mobile gaming outfit, which is supported in part by Murren’s former employer, at $1.1 billion. That implies a valuation on the Las Vegas-based target at 2.5x projected 2022 revenue of $435 million, or 12.3x forecast 2022 pro forma adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $90 million.

Funds managed by BlackRock, ClearBridge Investments, Neuberger Berman Funds, and MGM Resorts are participating in a $250 million private investment in public equity (PIPE) financing round at $10 per Acies share.

After giving effect to the transaction, the company is expected to have approximately $290 million of cash and a public equity currency to accelerate PLAYSTUDIOS’ growth initiatives, which include substantially expanding product development and acquisitions of other gaming and related companies,” according to a statement.

The deal, which is expected to close in the second quarter, was announced following the close of US markets. On the news, shares of Acies surged almost 25 percent in after-hours trading.

Acies/Playstudios Make Good on Rumor

Murren, along with former Morgan Stanley investment bankers Edward King and Daniel Fetters, formed Acies last year just months after the executive left MGM to head Nevada’s COVID-19 response task force. Following an initial public offering (IPO) in which it raised $200 million, it was widely believed the SPAC would hunt for merger partners in the gaming arena.

Last week, reports surfaced that Acies was eyeing Playstudios in a deal that would value the target at $1 billion or more. The mobile games provider could be a hit with investors, because it operates in a fast-growing niche with a strong growth trajectory of its own. From 2017 through 2019, Playstudios’ revenue increased at a compound annual growth rate (CAGR) of 22 percent. That figure is forecast to accelerate to 27 percent from 2020 through 2022.

Adjusted EBITDA grew at a CAGR of 46 percent from 2017 through 2019, and with the company forecasting a CAGR jump of 67 percent from 2020 to 2022.

Not only does Playstudios dwell in a market worth an estimated $152 billion, there’s obvious benefits to its relationship with MGM. Members of the social casino’s playAwards club can use points and rewards accrued in that program at a dozen MGM land-based casinos, including glitzy venues such as Aria and Bellagio on the Las Vegas Strip.

Overall, the Playstudios loyalty offering spans 17 countries, 84 brands, and 275 partners.

To date, the user “community has used its in-app loyalty points to purchase over 10 million rewards, with a retail value of nearly $500 million,” according to the statement.

Gaming SPAC Fever Continues

Acies’ deal with Playstudios isn’t the only blank-check deal in the gaming industry announced Monday. Early today, Tilman Fertitta’s Fertitta Entertainment confirmed it’s merging with FAST Acquisition (NYSE:FST) in a transaction valuing the operator of five Golden Nugget casinos and the Landry’s restaurant consortium at $6.6 billion.

All that after three gaming firms debuted as public companies in December following mergers with SPACs.

As of Jan. 28, 75 SPACs targeting a variety of sectors went public since the start of this year, and more with eyes on the gaming industry are on the way.