Novomatic’s Ainsworth $1 Takeover Raises Jobs and Pokies Questions

Novomatic first tried to secure the deal through a court-approved scheme of arrangement, but that takeover pathway fell apart after several influential shareholders, including Kjerulf Ainsworth (son of founder Len Ainsworth), and investment funds Allan Gray and Spheria Asset Management rejected the proposal, arguing that the valuation is too low.

However, Novomatic’s push for control over Ainsworth Game Technology has taken a sharp turn ever since, and rather than walk away, the Austrian giant has changed tactics. It now holds just over 55% of Ainsworth’s stock and has rolled out an unconditional takeover bid priced at $1.00 per share. The company has described this as its “best and final” offer, making it very clear that investors should not expect a better deal.

The twitch in strategy came after a shareholder group led by Kjerulf Ainsworth voiced their concerns about the earlier proposal. However, despite the resistance, Ainsworth’s independent board has advised investors that the new offer is “fair and reasonable”, and the market’s immediate reaction seemingly approves of that. Ainsworth’s share price surged more than 30% in a single day, showing strong interest from investors in the takeover. However, questions still remain about whether Novomatic can turn its majority stake into full control, particularly with some influential shareholders still protesting it.

Novomatic’s move to take control of Ainsworth isn’t just another corporate story, but it might have immediate implications for the Australian market and economy. Ainsworth is one of the few remaining locally based poker machine manufacturers, and employs around 200 people in Sydney. Investors, analysts, and industry experts are now closely monitoring whether Novomatic will keep operations in Australia or shift key AGT functions overseas, which would directly affect local manufacturing and jobs.

The market has already reacted strongly to the proposition, with AGT shares jumping more than 30% on the day the unconditional $1 takeover bid was first announced, showing that investors are optimistic of the deal, but it also put pressure on the remaining shareholders to decide whether to sell at the offered price or hold out for potentially higher returns if unhappy shareholders succeed in their attempts for a better deal.

Beyond the share price, the takeover will also have wider industry implications. With pokies generating around $25 billion annually, foreign ownership of one of Australia’s leading and biggest pokie suppliers could influence the sector’s dynamics in the country, including pricing, innovation, and, probably most importantly these days, regulatory lobbying.

The future of Ainsworth remains uncertain. While Novomatic’s $1 takeover bid has shaken up the market, key shareholders could still influence the final outcome if they decide to hold out or negotiate for better terms.

Even if Novomatic succeeds in gaining full control, the future of Ainsworth as an independent company is far from guaranteed. The Austrian giant could choose to fully integrate Ainsworth into its global operations, potentially retiring the well-known Australian brand.

And although full integration is less likely, key functions such as research and development, manufacturing, or management relocation are reducing the company’s physical presence in Sydney and impacting local jobs.

On the other hand, Novomatic might retain the Ainsworth name in certain markets, particularly where it has strong recognition, such as Australia or the United States. In that case, the brand would continue to exist, but under the direction of its new parent company.