{"id":226926,"date":"2022-08-16T22:35:03","date_gmt":"2022-08-17T03:35:03","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=226926"},"modified":"2022-08-17T10:46:53","modified_gmt":"2022-08-17T15:46:53","slug":"inspired-entertainment-may-need-to-boost-takeover-bid-for-ags","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/","title":{"rendered":"AGS\/Inspired Deal May Not Happen or Could Reach $13 a Share: Analyst"},"content":{"rendered":"

It\u2019s possible that Inspired Entertainment\u2019s (NASDAQ:INSE) pursuit of AGS (NYSE:AGS) doesn\u2019t end in a consummated deal. But it\u2019s also plausible the suitor boosts its offer for the slot machine maker.<\/p>\n

\"AGS\"
A slide from a 2019 AGS investor presentation. An analyst says Inspired may be forced to raise its takeover offer for the company. (Image: AGS)<\/figcaption><\/figure>\n

That\u2019s the sentiment of Stifel analyst Jeffrey Stantial who, in a note to clients today, explores both scenarios. Though Inspired hasn\u2019t officially confirmed it\u2019s courting AGS, news to that effect broke last week. The target later revealed it received and rejected<\/a> a $10 a share, all-cash takeover proposal.<\/p>\n

Stantial says a variety of factors could make it difficult for Inspired to seal this deal, though AGS confirmed it is holding talks with the prospective buyer.<\/p>\n

Overall, we sense investors are skeptical a deal will be reached, given INSE’s debt capacity, financing risks, still forthcoming ROI for AGS’s operational improvements, and a history of trading over $18\/share,\u201d<\/strong> wrote the Stifel analyst.<\/p><\/blockquote>\n

While the point about trading above $18 is relevant, the 52-week high on AGS stock is $10.45, and it hasn\u2019t closed above that in three years.<\/p>\n

Apollo Considerations, Offer Could Be Boosted<\/h2>\n

As Stantial points out, much of the success of Inspired\u2019s overture for AGS could boil down to what price Apollo Global Management (NYSE:APO) is willing to accept.<\/p>\n

\n

As of the end of the second quarter, the private equity giant owned 8.2 million shares of the gaming equipment maker, or 22.08% of its shares outstanding. That\u2019s more than double the amount controlled by the second-largest institutional investor. It indicates Apollo could have considerable sway when it comes to AGS being acquired<\/a> or remaining independent. The private equity company also controls two AGS board seats.<\/p>\n<\/div>\n

\u201cWhile we agree the odds appear to be stacked against a potential deal, ultimately we come back to Apollo’s likely influence in the decision highlighting the relative maturity (~9 years) of the investment,\u201d adds Stantial. \u201cAssuming INSE\/AGS come to an agreement, we could see the final purchase price drift closer to ~$13\/share given still manageable PF leverage, and return thresholds for key AGS shareholders.\u201d<\/p>\n

An offer of $13 a share hasn\u2019t been publicly revealed, and it would be nearly double AGS\u2019s closing price on Aug. 11 — the day prior to the acquisition news initially being reported.<\/strong><\/p>\n

Assessing Inspired\u2019s Motivations<\/h2>\n

Inspired\u2019s attraction to AGS is understandable. The suitor doesn\u2019t have much top line exposure to the US, and the slot upgrade cycle could be lengthy, potentially providing support for the AGS thesis. Additionally, many AGS customers are regional and tribal casinos with loyal customer bases that may be unfazed by a recession.<\/p>\n

Additionally, analysts note the marriage would be accretive to Inspired\u2019s earnings per share,<\/a> and would boost its free cash flow. Still, there are moving parts regarding bringing an AGS\/Inspired marriage to the altar.<\/p>\n

\u201cCoupled with a shareholder base that likewise believes in the long-term story and valuation dislocation, and we expect management’s preference is to see the ongoing turn-around efforts out to fruition,\u201d concludes Stantial. \u201cHowever, we do note the INSE CEO position remains unfilled following the founder’s departure in 2018, with responsibilities split among the Chairman, COO, CFO, and CSO. This could suggest optionality around AGS management joining the pro-forma company.\u201d<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s possible that Inspired Entertainment\u2019s (NASDAQ:INSE) pursuit of AGS (NYSE:AGS) doesn\u2019t end in a consummated deal. But it\u2019s also plausible the suitor boosts its offer for the slot machine maker. That\u2019s the sentiment of Stifel analyst Jeffrey Stantial who, in a note to clients today, explores both scenarios. Though Inspired hasn\u2019t officially confirmed it\u2019s courting […]<\/p>\n","protected":false},"author":46,"featured_media":226928,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,32093,69293],"tags":[81903,81966,81890],"acf":[],"yoast_head":"\nInspired Entertainment May Need To Boost Takeover Bid For AGS<\/title>\n<meta name=\"description\" content=\"Inspired Entertainment may need to lift its takeover off for AGS, says analyst.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Inspired Entertainment May Need To Boost Takeover Bid For AGS\" \/>\n<meta property=\"og:description\" content=\"Inspired Entertainment may need to lift its takeover off for AGS, says analyst.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-08-17T03:35:03+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-08-17T15:46:53+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/AGS5.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"960\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/\",\"url\":\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/\",\"name\":\"Inspired Entertainment May Need To Boost Takeover Bid For AGS\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/AGS5.jpg\",\"datePublished\":\"2022-08-17T03:35:03+00:00\",\"dateModified\":\"2022-08-17T15:46:53+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Inspired Entertainment may need to lift its takeover off for AGS, says analyst.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/inspired-entertainment-may-need-to-boost-takeover-bid-for-ags\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/AGS5.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/08\/AGS5.jpg\",\"width\":1280,\"height\":960,\"caption\":\"A slide from a 2019 AGS investor presentation. 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