Bragg Gaming explores new horizons with the formation of M&A committee

Lea Hogg March 27, 2024

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Bragg Gaming explores new horizons with the formation of M&A committee

Bragg Gaming has recently announced the formation of a special committee led by M&A expert Don Robertson. The committee is tasked with exploring strategic alternatives for the company, which may include a potential sale of the business. The committee will also consider various options such as selling the company or its assets, merging with another entity, securing new financing, or making further acquisitions.

Bragg Gaming has not set a specific timeline for the completion of this review and has not made any decisions regarding these strategic alternatives. While the review process is underway, the company’s management remains dedicated to implementing the company’s strategy and business plan, with the full backing of the board.

Hedge fund activist concerned on low valuation

This move comes in the wake of an open letter published in November 2023 by Jeremy Raper, CEO of Raper Capital and the second-largest disclosed investor in Bragg. In his letter, Raper voiced his dissatisfaction with the consistently low valuation of the company by the market. Despite a fourfold increase in revenue and a fourteen-fold increase in EBITDA since the 2018 Oryx acquisition, the company’s share price was 25 percent lower than at the time of the acquisition. Raper called for a full sale of the business to realize shareholder value that the market’s assessment did not provide.

In Q4 2023, Bragg reported a slight decrease in revenue, down 1.4 percent from the same period the previous year, amounting to €23.4 million. This was attributed to revised commercial agreements with Entain’s BetCity to supply its PAM platform until 2025. Bragg CEO Matev? Mazij stated that these changes reduced customer concentration and positioned the broader business for sustained, increasingly profitable growth.

Mazij also pointed out the challenges in the Dutch market, including increased competition and new regulations introduced since July 2023. These regulations included a phased ban on “untargeted” advertising and several safer gambling changes. Bragg anticipates these challenges to continue, with “further adjustments” expected in 2024.

Despite these challenges, Bragg showed positive results on an annual basis. The company reported €93.5 million in revenue for the year, up 10.4 percent from 2022, and EBITDA also rose 26.3 percent to €15.2 million during the year. However, the company’s loss widened to €3.8 million, primarily due to interest and other financing charges.

Mazij expressed confidence in Bragg’s strategic actions, which have positioned the company as a vital content source for leading international iGaming operators. He affirmed the company’s readiness to maintain business momentum while executing initiatives that foster cash flow growth and generate added value for shareholders.

As of now, Bragg Gaming Group Inc. (BRAG) is trading at $5.29, up 1.24 percent.