Ainsworth postpones vote on Novomatic takeover

On the 24th of May 2016, Australian casino slot machine maker Ainsworth Game Technology Ltd postponed a meeting relating to a takeover by Novomatic AG of Austria.

The exact date of the next meeting is unclear. Yet board members have all agreed that will take place “no later than 30 days” after the 3rd of June – the date originally planned for takeover.

The exact date of the next meeting will be decided after the board receive feedback from the Australian Takeover Panel.

The rise of smaller companies

The fact that a relatively small, privately-owned company is able to even consider taking over a much larger public entity has come as a surprise to many. Yet it just goes to show how the popularity of virtual table games, slots and other games allow such small firms to grow with the ever-expanding online market. Companies, such as Red Flush Casino, are seeing explosive growth internationally as the market breaks well beyond the 15.02 billion USD value given in 2010.

The terms of proposed deal

The initial proposal for the takeover was announced on the 23rd of February this year. Under the terms of the deal, Novomatic would acquire 53% – a controlling share – of Ainsworth Game Technology from its owner and founder, Len Ainsworth.

In a filing on the 3rd of May, the Ainsworth board were unanimous in recommending that shareholders vote in favour of the takeover by the Austrian company.

Reasons for delay

The deal depends on the family of Mr Ainsworth. The major shareholders want more time to consider whether or not the move will be to the detriment of their existing shareholders. This comes despite the decision to vote in favour of the takeover back in early May.

The Australian Securities and Investments Commission applied to the panel to get involved in the planned sale to try and salvage the takeover.

A second press release from the 17th of May shows that investment firm Fortress Centaurus Global Master Fund Ltd had made another request to the panel to get involved. Fortress Centaurus are working on behalf of the Ainsworth family.

According to a statement from Fortress, Novomatic have “refused to confirm” that it will treat existing shareholders – principally the Ainsworth family – as ‘excluded voters’. The family says this is a must to ensure “confidence in the integrity of the market”.

This comes despite the fact that in an earlier statement, Novomatic said that it supports the “immediate appointment” of an independent person to chair the Ainsworth Gaming Technology board. It also said that it wants the Australian-based company to continue to have a majority of independent directors.