Hydra Industries Acquisition Corp., a special purpose acquisition company formed for the purpose of effecting a merger, acquisition or similar business combination, has announced it has entered into a definitive agreement to acquire Inspired Gaming Group and its affiliates from funds managed by Vitruvian Partners LLP.
The transaction reflects a valuation for Inspired of GBP200 million (US$266.9 million).
Inspired’s fiscal year end September 2016 Revenue and EBITDA are estimated to be $110 million and $38 million, respectively, with the potential to grow meaningfully, driven by a backlog of recurring revenue contracts.
Consideration paid to the seller group for their interests in the company will consist of cash available at closing after transaction expenses, and Hydra common shares issued at a price of $10.00 per share. The seller group may receive additional common shares as further consideration, depending on future performance. The cash component of the transaction will be funded by a $20 million private placement from Macquarie Capital in addition to Hydra’s cash in trust, which is currently approximately $80 million.
Assuming none of Hydra’s shares are redeemed for cash in trust, the seller group would retain 35 percent ownership at closing. Certain liabilities of Inspired, including existing credit facilities, are expected to remain in place at closing.
Upon consummation of the transaction, Hydra’s CEO Lorne Weil will become executive chairman while Inspired’s founder and current CEO Luke Alvarez will continue in his leadership role as CEO in addition to being named to the Board of Directors.
The proposed transaction has been unanimously approved by the Boards of Directors of both Hydra and Inspired, and is expected to close in October 2016, subject to approval by Hydra’s shareholders, required regulatory approvals and other customary closing conditions.
Immediately after the closing, Hydra intends to change its name to Inspired Entertainment, Inc. and will continue to trade on NASDAQ under the ticker INSE.