Global Cash Access a Rising Medium in Gambling Arena
21 March 2015
Prior to now the gaming community did not pay much required attention to Global Cash Access. The Las Vegas-based company did a quiet and exceptional job providing casinos with ATMs, point-of-sale and debit card transaction devices, slot machine ticket redemption kiosks and other payment processing equipment. Global Cash Access paid $1.2 billion for Multimedia Games, Inc., which had its corporate headquarters, manufacturing facilities and development offices in Austin, Texas. The company maintained a sales and marketing arm in Las Vegas.
Earlier this month, during the company’s fourth-quarter earnings conference, Global Cash Access executives talked about owning Multimedia Games. The sale closed at the end of December 2014, with company officials aggressively confident on the new subsidiary. At the announcement of the deal in September 2014, it was widely acknowledged that the merger of a payment processing business and a slot machine manufacturer was a peculiar union.
“Every day, we see more and more evidence that our rationale for the acquisition is tremendous and that the combination has created a company that is distinctly differentiated from any other,” Global Cash CEO Ram Chary said. Analysts who follow the gaming equipment sector were in love with Multimedia Games. Financial issues, diminished sales prospects and lack of any interested buyers nearly shut down the company in 2010. But Multimedia became a genuine turnaround narrative.
The company developed slot machines that took away casino floor space from the big equipment manufacturers. Multimedia Games was delivering solid returns on investment and its stock price was 10 times what it was four years earlier when Global Cash Access emerged. With a merger trend initiating amidst the slot machine sector, it was speculated that one of the major companies — Bally Technologies or International Game Technology — would move in on Multimedia. However, Bally was bought by Scientific Games Corp. for $5.1 billion and IGT signed a merger deal with GTECH Holdings for $6.4 billion. That move enabled Global Cash Access to promptly put together a deal.
During an interview at last year’s Global Gaming Expo, Chary said the purchase probably took the rest of the gaming sector by surprise. But sensible to join and merged the businesses. “It has been invigorating to work with the unique Austin culture of Multimedia Games,” Chary said. The transaction has already eliminated $10.9 million in corporate costs. Company leaders expect to hit $24 million cost savings by the end of 2015.
Mike Rumbolz is the only Global Cash board member with hands-on casino or gaming industry experience. He served as CEO of slot machine manufacturer Anchor Gaming back in the 1990s, and was president of Casino Windsor in Canada. Rumbolz is also a former Nevada State Gaming Control Board chairman. Following the earning release, the company’s core payment processing business remained solid in the fourth quarter of 2014, with overall revenue growth at a moderate 3%.