Ainsworth Game Technology, one of the leading pokies suppliers in the market, allegedly decreased the value of its stock, as the company’s American shareholder claims. According to the shareholder, the company began a strategic review process out of nowhere, and it affected the price of its shares.
The supplier is thinking about taking itself private and invited Macquarie to help them increase the value for all shareholders. The results of the review should be published in a few months.
Two sides of the story:
According to the annual report, CEO Harald Neumann ruled out listing the stock in the US. However, not all shareholders are happy about this outcome: some of them think that the main goal of the whole process is to sell the shares to Novomatic, which is already a major shareholder. The fact that Neumann worked for Novomatic is only a cherry on top when it comes to such claims.
One of the shareholders, David Kanen, said: “I believe our CEO talked the stock down. By limiting themselves to being in obscurity, solely on the Australian exchange … they’re missing a much bigger audience. Remaining in obscurity results in low volume, lower valuation, and lack of price discovery, no US research coverage.”
On the other hand, Neumann believes that listing in the US won’t be much of a help in increasing the price, and costs will be up to $10 million. On February 29, David Kingston from K Capital, another shareholder, suggested this, and Neumann responded: “You are not the first who is telling me [listing on a US exchange] would be much better, as we have investigated this with several companies, and that’s simply not the case.”
However, some of the shareholders don’t believe that the costs of listing are so high. Kanen claims that the US listing would cost about $US1.3 million ($1.96 million) in total. He said: “It was a complete falsehood for him to say $7 [million] to $10 million. I’ve been a patient shareholder for approximately three years. Harald knows the US is a more liquid market with more investors that could potentially buy the stock.”
Increase in shares and revenue predictions:
However, Allan Gray’s Simon Mawhinney agrees with Harald and claims that double listings would be very expensive and that the results wouldn’t be satisfactory.
In 2023, Ainsworth’s shares increased by 13%. At this point, an Australian industry giant Novomatic is likely to increase its number of shares. The company currently owns over 50% of the shares. Neumann claims the rumors are false. Kanen disagrees and wants to vote against a CEO in order to prevent the shares from further decreasing. He also thinks that Ainsworth is worth more than the shareholders expect since the Raptor Cabinet, Sao Bao Panda and Sao Bao Dragons games can generate significant revenue. It is estimated that the company will generate $425 million in revenue, and that adjusted EBITDA will increase to $118 million by the end of the year.
As the Australian Financial Review (AFR) reports, an anonymous source revealed that there are more companies to bid: Oaktree, American Gaming Systems, Zitro Games, and Merkur Group.
The shares were $1.21 on Friday, and the company didn’t want to comment on the claims.
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