Evolution has terminated its merger agreement with Galaxy Gaming, a specialist in table games and casino technology. The decision was announced on Tuesday, following comments from CEO Martin Carlesund last week, who indicated that the merger was not crucial for the company's operations.
As a result of this termination, Evolution will pay Galaxy Gaming a fee of $5.2 million. Despite ending the merger talks, Evolution affirmed its intention to maintain its existing business relationship with Galaxy Gaming, having recently renewed their licensing agreement with a 10-year extension in 2023.
Carlesund hinted at the impending termination in the press release accompanying Evolution's second-quarter results, noting that the period for closing the deal had lapsed on Friday. "Two years have passed, and Evolution has spent significant time, effort and resources handling the rather large amount of administration required to close this acquisition," he explained.
He acknowledged Galaxy Gaming as a commendable company but stressed, "due to its size, the transaction is not significant for Evolution. The outcome has no material impact on our existing business, our US operations, or our long-term ambitions."
The merger had initially been proposed in July 2024, with Evolution set to acquire all outstanding shares of Galaxy Gaming for approximately $85 million. However, on Monday, Galaxy Gaming revealed that two key gambling regulatory approvals necessary for the deal had not been secured. The company stated that it was assessing its options, considering either seeking a further extension to complete the merger or terminating the agreement altogether. Ultimately, Evolution decided to cease negotiations.
In its recent financial report, Evolution revealed a 1.2% decline in net revenue for Q2, amounting to €517.8 million ($591.4 million). This dip was largely attributed to a 3.7% drop in revenue from Asia. EBITDA also saw a decrease, falling to €341 million from €345.3 million during the same quarter of the previous fiscal year.
Interestingly, revenue in Europe has shown signs of recovery, with a 3.5% increase from the previous quarter. Additionally, revenue from Latin America surged by an impressive 26.3% year-on-year.
Carlesund expressed a positive outlook, stating, "Revenue and margin are moving in the right direction compared to the first quarter, cost control remains strong, cash flow is improving and we continue to expand in key markets while executing on our product roadmap. The road is almost never straight, but what matters is that we are moving forward. Some curves are harder than others, but they can also be fun. And the same goes for Evolution."
