Continuing the shrinkage of the manufacturing sector, Global Cash Access is taking another chess piece — Multimedia Games — off the board. GCA will pay $1.1 billion for Multimedia, which specializes in VLTs for racinos and tribal markets.The price represented a 31% premium to Multimedia’s share price at Friday’s closing bell … which should deter other bidders. (Analyst Todd Eilers thinks otherwise.) The company, which is based in Austin, Texas, will continue to operate game development from the Lone Star State, while direction of the combined companies will be done from Las Vegas.
As its name suggests, “GCA provides casino customers access to cash through ATMs, point-of-sale and debit-card transactions as well and offers slot-machine ticket redemption and jackpot kiosks.” $19 billion is estimated to flow through its machines. “It’s a space that’s been consolidating, and this is one of the better assets in my view,” said Sidoti & Co. gaming analyst Matt Kempler. Its also a logical one, since GCA and Multimedia’s areas of specialization will complement, not duplicate one another.
Union Gaming Group analyst Robert Shore disagrees. “GCA isn’t a slots company, they’re a processing company. They have synergies with slots, but I’m not sure how it’s going to work out. I thought it would be a bigger slots company.” GCA is projecting 20% ROI from the merger. The deal comes with an $11 million breakup fee — one that escalates to $32.5 million if the transaction doesn’t close.
GCA has kept a low profile for several years now, after a scandal in Arizona in which is was found to have committed fraudulent transactions, misled regulators … in addition to a long list of other misdeeds. It’s been able to regain some of its luster, although it was a long process.
* With four new racinos in the market, Ohio‘s gaming revenue grew 37% last month. While still weak, at $105 per slot per day, Pinnacle Entertainment‘s Belterra Park is showing incremental improvement. Revenues at Penn National Gaming‘s Hollywood Columbus improved 7% and Hollywood Toledo was flat,
despite a superior performance at the slots ($208/slot/day). Horseshoe Cleveland had a strong August, up 8%, but Horseshoe Cincinnati took a big hit, down 16%. Caesars Entertainment‘s Thistledown Racino (-5%) appears to be losing business to Hard Rock Rocksino Northfield Park, which grossed nearly $17 million to Thistledown’s $11 million. Penn’s newest racino, Hollywood Dayton, hasn’t been in the market long enough to have made more than a token impact, at $2 million, although it did an eye-popping $466/slot/day in its three days of play. Small wonder that experts think Ohio is on pace to be a $2 billion/year casino market.
Above-average performers in Ohio include Thistledown ($313/slot/day), Hard Rock Rocksino ($237/slot/day), Miami Valley Gaming ($224/slot/day) and Horseshoe Cleveland ($207/slot/day). MTR Gaming‘s Scioto Downs ($187/slot/day) didn’t quite make the cut.
* Foxwoods Resort Casino is reportedly liquidating assets as the risk of defaulting on interest payments looms.
* It may have been years in coming but the Tohono O’odham Nation has broken ground on its long-sought Glendale casino.
