Evolution has officially notified Galaxy Gaming of the termination of their merger agreement, a decision announced on Tuesday. This follows remarks from CEO Martin Carlesund last week, indicating that the merger was not essential for the company's operations.
As a result of this termination, Evolution is obligated to pay Galaxy Gaming a fee of $5.2 million.
Despite this development, Evolution confirmed that it would maintain its current business relationship with Galaxy Gaming. Notably, the two companies had just extended their licensing agreement for another ten years earlier in 2023.
Carlesund's comments in the press release for Evolution's Q2 results suggested that this decision was forthcoming after the expiration of the closing period for the merger on Friday. He elaborated, "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. Galaxy is a great company; however, 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 was initially announced in July 2024, with Evolution intending to acquire all outstanding shares of Galaxy Gaming in a deal valued at approximately $85 million. However, just prior to the termination, Galaxy Gaming revealed that two necessary gambling regulatory approvals had not yet been secured. They stated they were "evaluating its options," which included either seeking an extension to facilitate the merger's closing or terminating the agreement entirely.
Ultimately, Evolution chose to proceed with the termination rather than explore alternative solutions proposed by Galaxy.
In its Q2 report, Evolution also noted a year-on-year revenue decline of 1.2%, totaling €517.8 million ($591.4 million), driven by a 3.7% drop in Asian revenue. EBITDA fell from €345.3 million in the same quarter of FY25 to €341 million.
Despite these reductions, Evolution saw a resurgence in European revenue, which grew by 3.5% compared to the previous quarter, while revenue from Latin America surged 26.3% year-on-year.
Carlesund expressed a positive outlook: "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."
