Prague Gaming is forming a committee to explore a possible sale
Bragg Gaming (NASDAQ: BRAG ) on Tuesday announced the formation of a special committee to consider strategic alternatives, including a possible sale.
A committee of board members, led by director Don Robertson, concluded that the small-cap gaming stock is up 44.5% in the past 12 months. Canada-based Bragg had previously announced a "strategic review" in 2021, but the plan made no mention of a sale and drew no significant attention.
A special committee has been appointed to review and consider strategic options, which could include a sale of the company or its assets, a merger, a financing, further acquisitions or other strategic options, Bragg said in a statement.
The gaming company added that there is no specific timetable for completing the strategic review and that no deal may materialize.
Investors previously urged Bragg Gaming to consider sale
About five months ago, Jeremy Raper, founder of Raper Capital, which manages 375,000 shares of the gaming company, wrote a letter to Bragg CEO and Chairman Matevz Mazij. He criticized the company for poor performance.
At the time, Rapper noted that selling Bragg could provide investors with "certainty of value," especially since the stock trades at a low valuation relative to its peers. in a post
Bragg's announcement may be timely, as analysts generally expect iGaming and sportsbook integration to increase, with a particular focus on technology. This could mean that a wide variety of applicants may be interested in Prague.
Bragg "will not comment further on the status of the strategic review process at this time and intends to provide further updates as appropriate and consistent with applicable securities laws." While the strategic review process is ongoing, the company's management "remains committed to serving on the board's to implement the company’s strategic and business plans with full support,” the company added in a press release.
Precedent of Prague Auction
Bragg is one of more than half a dozen business-to-business (B2B) or business-to-consumer (B2C) iGaming companies that have been acquired in the past 20 months.
If offered a generous premium, Bragg could unlock significant value for investors upon sale, as the average enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio for these deals is 15x. That’s more than twice what Prague trades today.
Last year, Raper noted that if Bragg stock traded at 12x EV/EBITDA, its shares would be worth $13.50. At press time, the stock was trading at $5.30.
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Source: www.casino.org
