Shareholder Tensions Rise After Novomatic’s Ainsworth Takeover Bid

Austrian gaming powerhouse Novomatic’s push for full ownership of Ainsworth Game Technology is running into increasing resistance from some minority shareholders despite support from Ainsworth’s Independent Board Committee (IBC). This resistance could potentially complicate what Novomatic had hoped would be a straightforward process in its bid to fully acquire the ASX-listed slot machine manufacturer.

Some Stakeholders Believe the Deal Undervalues Ainsworth

Earlier this month, Novomatic offered AUD 1 ($0,64) per share in cash to acquire the remaining 47.1% stake in Ainsworth that it doesn’t already own. This offer values the company at approximately AUD 336.5 million ($215.12 million), a 35% premium over Ainsworth’s pre-offer trading price. The slot manufacturer’s IBC encouraged investors to support the deal, noting that the consolidation would bring substantial value.

The IBC has carefully evaluated the proposed consideration. We unanimously formed the view that the proposal represents attractive and certain value for minority shareholders.

Daniel Gladstone, Ainsworth chairman

However, Kanen Wealth Management, a US-based investment company holding around 2% of Ainsworth’s shares, has publicly rejected the offer, describing it as inadequate and coercive. The firm sent a strongly worded letter to Ainsworth CEO Harald Neumann, alleging that Novomatic abused its majority stake to push a deal that undervalued Ainsworth’s improved financial performance and rising prospects.

Kanen argues that Ainsworth should be valued at roughly AUD 1.75 ($1.12) per share, based on the company’s FY24 underlying earnings of AUD 48.2 million ($30.82 million), the conclusion of a long-standing legal debate in Mexico, and excellent market potential in North America. Kanen also referenced Neumann’s late 2023 remarks, where the CEO noted that an AUD 1 share price significantly undervalued Ainsworth.

Opinions Remain Split

While Novomatic and Ainsworth’s board contend the suggested price captures the company’s long-term prospects, opponents such as Kanen believe the deal is designed to discourage open market competition and suppress shareholder input. The consolidation still requires approval from Ainsworth’s minority shareholders in addition to the customary regulatory approvals.

Ainsworth stakeholders will likely vote on this proposal in the second half of 2025 after an independent expert report regarding the offer’s fairness. If the deal passes, the two companies can anticipate a final court approval by the end of August. However, the outcome will likely depend on whether Kanen can convince the other stakeholders to back his position.

For Novomatic, the total takeover aligns with its goal to bolster its Asia-Pacific and US presence. Incorporating Ainsworth’s technology and market penetration into its international operations spanning more than 130 countries should bring substantial long-term dividends. However, looming shareholder meetings and heated debates mean that the deal is anything but set in stone.