It's the stuff dreams are made of for small cap investors, a bigger company swoops in and buys the smaller peer at a huge premium to current value, making longs a pile of profit. Well, that wasn't exactly the case for long-term holders of NYX Gaming Group Ltd. (TSX-V:NYX), but Scientific Games Corp. (NASDAQ:SGMS) did agree to pay more than twice yesterday's value for the Toronto-listed small cap digital gaming provider.
From its headquarters in Las Vegas, NYX Gaming staffs over 1,000 people, including more than 600 engineers. The company's portfolio includes its award-winning open gaming system branded NYX OGS that allows licensees to leverage multi-vendor casino content from around the world and more than 2,000 game titles via the gaming system.
For a price tag of approximately CAD$775 million ($631 million U.S.), Scientific Games will add the offerings to its product bag, making it a global leader in digital gaming and digital lottery through its robust platform and distribution network. Per the deal, shareholders of NYX will receive CAD$2.40 for each share owned, representing a premium of 112% compared to the price of the stock on Tuesday, the day before the deal was made public.
Scientific Games sees the acquisition as being accretive to earnings and cash flow in the first year following the transaction closing.
The last time shares of NYX were at $2.40 was back in June 2016 as part of a slide from a high of $5.50 in February 2015 following the company coming public in the waning days of 2014. For those shareholders from back then that never averaged down, it's a little bittersweet at this point, but for those that snapped up shares when then slipped sub-$1.00 earlier this year, the buyout news is a beautiful thing.
In mid-afternoon trading on Wednesday, shares are trading just shy of the buyout price, holding at $2.34 for a gain of 107% on the day.
