Evolution Terminates Galaxy Gaming Deal After Regulatory Delays

Evolution Terminates Galaxy Gaming Acquisition – Regulatory Delays End $85 Million Deal

Key Takeaways

• Evolution has terminated its planned acquisition of Galaxy Gaming after regulatory approvals were not obtained within the agreed timeframe.
• The original deal, announced in July 2024, valued Galaxy Gaming at approximately $85 million.
• Evolution will pay Galaxy Gaming a $5.2 million termination fee.
• Evolution stated the transaction was not significant to its overall business operations.
• In Q2, Evolution reported a 1.2% year-on-year revenue decline to €517.8 million and a drop in EBITDA to €341 million.

Termination Follows Expired Closing Deadline and Pending Regulatory Approvals

Evolution has formally ended its merger agreement with Galaxy Gaming after prolonged regulatory delays prevented the transaction from closing within the agreed timeframe. The company confirmed on Tuesday that it had issued a notice of termination.

The acquisition was first announced in July 2024. Under the terms of the agreement, Evolution planned to acquire all outstanding shares of Galaxy Gaming in a transaction valued at around $85 million. However, the closing period for the deal expired on Friday without securing the remaining gambling regulatory approvals.

On Monday, Galaxy Gaming disclosed that two required regulatory approvals were still outstanding. The company stated it was evaluating its options, including seeking a further extension to facilitate the closing of the merger or terminating the agreement. Despite this, Evolution chose to proceed with termination.

As stipulated in the merger agreement, Evolution will pay Galaxy Gaming a $5.2 million termination fee.

Evolution Describes Deal as Non-Material to Its Business

Evolution addressed the status of the transaction in connection with its second-quarter financial results. Chief executive Martin Carlesund indicated that the agreement was not essential to the company’s long-term strategy or operational footprint.

Carlesund noted that two years had passed since the initial announcement and that Evolution had devoted significant time, effort, and resources to handling the administrative requirements associated with closing the acquisition. He described Galaxy Gaming as a strong company but emphasized that, due to its size, the transaction was not significant for Evolution.

According to Carlesund, the outcome has no material impact on Evolution’s existing business, its operations in the United States, or its long-term ambitions. This statement suggests that Evolution does not expect the termination to alter its strategic direction or financial outlook in a meaningful way.

Existing Commercial Relationship Remains in Place

Despite ending the acquisition process, Evolution confirmed that it will continue working with Galaxy Gaming under their existing business arrangements. In 2023, the two companies signed a 10-year extension to their licensing agreement.

This ongoing partnership means that commercial cooperation between the companies will continue independently of the terminated merger. The licensing agreement remains separate from the acquisition plan and is unaffected by the decision to end the transaction.

For industry observers and platform users, this distinction is relevant. While ownership consolidation will not proceed, operational collaboration between the two suppliers remains intact under the previously agreed framework.

Second-Quarter Results Show Revenue and EBITDA Decline

The announcement coincided with Evolution’s Q2 financial disclosure. The company reported net revenue of €517.8 million, equivalent to $591.4 million, representing a 1.2% decline year on year.

The decrease was primarily driven by a 3.7% drop in revenue in Asia. At the same time, Europe returned to growth after several consecutive quarters of declining revenue. European revenue increased by 3.5% compared with the previous quarter.

Latin America delivered the strongest regional growth, with revenue rising 26.3% year on year. These gains were not sufficient to offset the broader decline, resulting in the overall marginal decrease in quarterly revenue.

EBITDA for the quarter amounted to €341 million, down from €345.3 million generated in the same quarter of the previous financial year. The figures indicate a moderate reduction in profitability alongside the revenue dip.

In his comments, Carlesund highlighted that revenue and margin trends had improved compared with the first quarter. He also referenced continued cost control, improving cash flow, expansion in key markets, and execution of the company’s product roadmap.

Implications for the iGaming Supplier Landscape

The termination brings an end to a nearly two-year acquisition process that required regulatory approvals in multiple gambling jurisdictions. The inability to secure the final approvals ultimately prevented the deal from closing within the contractual timeline.

For Evolution, the decision limits further administrative and regulatory expenditure related to the transaction. The company has indicated that the acquisition was not central to its broader operations, suggesting limited structural impact.

For Galaxy Gaming, the outcome results in the continuation of its independent operations, accompanied by the $5.2 million termination fee from Evolution. At the same time, the existing 10-year licensing extension ensures continued commercial ties between the two businesses.

Our Assessment

Evolution has ended its planned $85 million acquisition of Galaxy Gaming after outstanding regulatory approvals prevented the transaction from closing before the agreed deadline. The company will pay a $5.2 million termination fee but maintains that the deal was not material to its operations. Both companies will continue their long-term licensing partnership, while Evolution reported a slight year-on-year decline in revenue and EBITDA for the second quarter.