by Ray Poirier |Unable to shake its doldrums, Cash Systems Inc. (CKNN) has agreed to be acquired by Global Cash Access Inc. (GCA). Including debt, the deal is being valued at $33 million.
The definitive agreement announced on Monday notes that the CKNN shareholders will receive $0.50 per share for each share held. The acquirer has agreed to redeem CKNN’s promissory notes and warrants for some $21 million.
As a result of the acquisition, Global Cash Access will be adding 120 new customers.
Subject to the customary approvals, the closing is expected to take place by the end of July.
Eliminating a competitor places Global Cash Access in a very strong position for future development, according to company officials.
"We believe this acquisition provides us with unique synergies within the gaming market and continues GCA’s product innovation efforts while providing the growth and cross-selling potential that our stockholders expect," said Scott Betts, president and CEO of Global Cash Access.
For Mike Rumbolz, a well-known Las Vegas gaming executive, it marks the end of his attempt to turn the company around. However, the company has failed to show a profit for the past couple of years and lost the support of its investors. Late last year, the company’s shares were trading near $7 each but by May the shares had fallen to less than $1.
On May 1, the Nasdaq advised the company that it was in non-compliance of the traders’ requirements that it shares trade above $1.
During Monday’s announcement, Rumbolz remarked, "I believe that this acquisition is a great opportunity for Cash Systems and its customers. GCA will lend scale and resources to continue to drive innovative products in the market."
Goldman, Sachs & Co acted a financial advisor to GCA and Deutsche Bank Securities Inc. and Alpine Advisors LLC acted as financial advisors to Cash Sytems.