American Gaming Systems (AGS), a key player in the gaming supply sector, is on course to transition from a public company to a private entity under the definitive acquisition agreement with Brightstar Capital Partners. This deal, valued at around $1.1 billion, signals a significant reshaping of the gaming supply landscape and carries substantial industry implications.
Brightstar Capital Partners, a private equity firm specializing in manufacturing, industrial, and service sectors, is set to purchase AGS stocks at $12.50 per share. This price represents a 40% premium over AGS’s closing stock price as of May 8, 2024, demonstrating Brightstar’s strong confidence in the future prospects of AGS. The transaction is supported by an array of financial and legal experts including Macquarie Capital and Cooley LLP for AGS, and Jefferies LLC, Barclays, Citizens JMP Securities, and Kirkland & Ellis for Brightstar. The completion of this strategic acquisition is anticipated in the second half of the next year, pending regulatory approvals and the approval of AGS shareholders.
Once the acquisition is complete, AGS will operate as a privately held company and its shares will be delisted from the public market. In a related move, AGS has decided to withhold the publication of its Q1 financial report.
The trend of privatization is evident across the industry with major companies, including Bally’s and Endeavor, opting for private ownership. The benefits include reduced administrative burdens and less exposure to market volatility. However, this shift typically limits access to public capital markets. In the case of AGS, the significant acquisition price suggests that capital will remain accessible.
The long-term strategic benefits of going private are a subject of debate, particularly regarding whether it enhances the company’s content and market position. Going private reduces public scrutiny but may not necessarily translate into improved operational efficiency. Personally, I believe this was a very strategic move and I’m excited to see what’s in store.
As AGS prepares for this transition, the industry watches closely. Stakeholders are particularly interested in how Brightstar’s investment will influence not only AGS’s future but also the broader dynamics of the gaming supply industry. The benefits of private ownership must be weighed against potential drawbacks in this vibrant and strategically complex field, but I see a lot of value and potential in this strategic move and the individuals involved are some of the best in the industry.
