Evolution AB terminated its $85 million acquisition of Galaxy Gaming Inc. after two years of regulatory delays, triggering a $5.2 million termination fee. The deal, first announced in July 2024, failed to secure two remaining gaming approvals by the July 17 deadline. Galaxy shares fell more than 8% to $1.57, less than half the $3.20 per share offer price.
Evolution AB terminated its $85 million acquisition of Galaxy Gaming Inc. after two years of regulatory delays, triggering a $5.2 million breakup fee and sending Galaxy shares below half the offer price.
"While we are disappointed with this outcome, we remain deeply committed to advancing our industry-leading games and progressive technologies," said Matt Reback, president and chief executive officer of Galaxy Gaming.
Evolution gave notice of termination Tuesday, one business day after the July 17 outside date passed without two remaining gambling regulatory approvals being obtained. Under the merger agreement, Evolution must pay Galaxy $5,234,678 within two business days. Galaxy shares fell 8.2% to $1.57 in over-the-counter trading, compared with the $3.20 per share — or $85 million — that Evolution had agreed to pay in July 2024.
The collapse leaves Las Vegas-based Galaxy, which holds 131 licenses across 28 U.S. states and global markets, to pursue independent growth. Evolution chief executive Martin Carlesund had signaled the outcome last week, telling investors the transaction was "not significant" for Evolution due to its size and that the company had spent "significant time, effort and resources" on regulatory administration. The two companies maintain a 10-year licensing agreement signed in 2023.
Evolution's decision followed comments from Carlesund in the company's second-quarter earnings release, where he noted the closing period expired Friday. "Galaxy is a great company; however, due to its size, the transaction is not significant for Evolution," Carlesund said. "The outcome has no material impact on our existing business, our US operations or our long-term ambitions."
Evolution reported second-quarter net revenue of €517.8 million ($591.4 million), down 1.2% year-on-year, with EBITDA of €341 million. European revenue edged up 3.5% from the prior quarter, while Latin American revenue jumped 26.3%. Evolution shares traded 1.4% lower at SEK704.60 in Stockholm.
Galaxy said it would continue working with Evolution within the framework of their existing commercial relationship. The company develops and distributes table games, bonusing systems and technology to physical and online casinos worldwide. Galaxy had originally agreed to the merger in July 2024, with the transaction expected to close by mid-2025 before the deadline was extended to July 17, 2026.
The termination fee of $5.2 million provides Galaxy with a cash buffer but does not compensate for the lost acquisition premium. Galaxy's market capitalization stood at roughly $25 million based on Tuesday's closing price, a fraction of the $85 million deal value agreed two years ago.
This article is for informational purposes only and does not constitute investment advice.
