UG Games shares rise on the back of South Korea’s double U.S. acquisition

 

Investors shrugged off concerns about high bids and cheered on the news of Korean social casino game publisher Doubles. In anticipation of synergy between the two companies, UGames Co. has decided to acquire a U.S. social casino subsidiary of International Game Technology (IGT), a global leader in game system technology.

UG Games, listed on Double’s stock KOSDAQ market, hit a 52-week high of 62,200 won in one day on Tuesday after the news broke. Shares closed at 56,500 won on Wednesday, up 7.01 percent from the previous trading day’s close of 52,800 won.

Stock prices began to rebound Tuesday after the South Korean company officially announced an agreement to acquire a full stake in IGT’s social casino subsidiary Double-Down Interactive LLC for 942.6 billion won ($82.68 billion). The deal valuation, which announces the largest overseas acquisition of domestic game publishers, initially raised concerns about how Korean companies with less than 400 billion won in cashable assets will close the deal, but expectations for synergy between the two companies are higher than these concerns.

Social casinos can integrate casino games such as Vegas and games including slot titles into social media platforms such as Facebook to acquire virtual currency instead of real money. It attracts casino players by providing a true Vegas experience.

As of last year, DoubleUGames controlled 3.5 percent of the global social casino market and DoubleDown controlled 7.5 percent. Kim Ga-ram, president of Double U Games, expected the acquisition to rank second in the 4 trillion won global social casino game market led by Platica.

Doubledown posted an operating profit of KRW 89.7 billion with sales of KRW 316.2 billion last year, and sales of only KRW 155.6 billion in 2016. The acquisition is expected to greatly support the double.The balance sheet after UGames’ merger with a Korean company.

Double U Games also appears to have bet that the company’s intellectual property consists of a wide range of free online slot machines through a U.S. acquisition to mark the largest overseas acquisition of a Korean game publisher. IGT, which has raised DoubleDown’s brand awareness, has occupied 40% of the world’s terrestrial slot machines since its acquisition in 2012. Double U Games, which does not operate offline slot machines, expects Double Down to increase its popularity and profit.

Doubledu Games will raise funds from trusted financial investors to buy its U.S. rival, easing concerns about its ability to raise funds somewhat. About two-thirds of the transaction, or 592.5 billion won, will be raised from outside investors, while the remaining 350 billion won will be raised by Doubles.Private equity fund Stick Investment will issue 210 billion won worth of convertible bonds, 90 billion won worth of bonds with new stock rights, and Samsung Securities will issue 292.5 billion won worth of senior bonds.

The acquisition funds will be ready as early as the end of this month, Doubl said.UG Games Team Leader Kim.

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