Bragg Gaming Forms Committee to Explore Possible Sale

Posted on: March 26, 2024, 10:10h. 

Last updated on: March 26, 2024, 10:59h.

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

Bragg Gaming (NASDAQ: BRAG) announced on Tuesday the formation of a special committee to explore strategic alternatives, including a potential sale.

Bragg Gaming
Bragg Gaming stock highlighted at the Nasdaq market site. The company announced the formation of a special committee that could explore a sale. (Image: Nasdaq)

Comprised of board members, the committee will be led by Director Don Robertson. It arrives with the small-cap gaming stock up 44.5% over the past 12 months. Canada-based Bragg previously announced a strategic review in 2021, but that plan didn’t mention a sale and didn’t generate much in the way of notable headlines.

The special committee has been appointed to consider and explore strategic alternatives, which may include the sale of the Company or of its assets, a merger, financing, further acquisitions, or other strategic alternatives,” according to a statement issued by Bragg.

The gaming company added that there is no specific timeline for the strategic review to be completed, and that it’s possible no transaction will materialize.

Investor Previously Pushed for Sale

News of Bragg forming the special committee to evaluate a potential sale arrived about five months after Raper Capital founder Jeremy Raper — who oversees entities managing 375K shares of the gaming company — penned a letter to Bragg CEO and Chairman Matevz Mazij, excoriating the company for slack share performance.

At that time, Raper noted a sale by Bragg could bring “certainty of value” for investors, particularly because the stock traded at depressed multiples relative to rivals. In a post on X (formerly Twitter) on Tuesday, Raper applauded Bragg’s strong fourth-quarter and 2023 results, though he has yet to comment on the formation of the ad hoc committee.

The announcement by Bragg could be well-timed, because analysts widely believe iGaming and sports betting consolidation will increase, with particular emphasis on technology. That could imply a variety of suitors could be interested in Bragg.

Bragg “will not be providing further comment on the status of the strategic review process at this time, and intends to provide further updates as circumstances warrant and in accordance with applicable securities laws. While the strategic review process is ongoing, the Company’s management remains committed to executing the Company’s strategy and business plan with the full support of the Board,” the firm added in the press release.

Precedent for Bragg Sale

Over the past 20 months, there have been more than half a dozen acquisitions of business-to-business (B2B) or business-to-consumer (B2C) iGaming companies, of which Bragg is one.

Bragg could unlock significant value for investors in a sale, assuming a generous premium is offered. That’s because those transactions took place at an average enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio of 15x. That’s more than double where Bragg trades today.

Last year, Raper noted that if Bragg traded at 12x EV/EBITDA, the shares would be worth $13.50. The stock resided at $5.30 at this writing.