Red Tiger acquisition reduces 120 jobs

Red Tiger acquisition reduces 120 jobs

25/03/2020

To strengthen the market share and increase efficiency NetEnt is making huge changes after the acquisition of Red Tiger, which occurred in September of 2019. The changes mean a cut by up to 120 employees, mainly in Sweden.

NetEnt has previously expressed the goal to integration with acquired Red Tiger gaming. The acquisition has exceeded expectations and offers significant potential synergies, increased efficiency and economies of scale. A restructuring is now being implemented to speed up the full integration within the NetEnt group, which means that several functions are relocated and that 120 full-time positions are made redundant in Sweden and Malta.

These measures are in line with NetEnt’s strategy to continuously improve all parts of the business to strengthen competitiveness and increase value creation in the company. The restructuring is estimated to result in annual savings of approximately SEK 150 million on a cash-flow basis, beginning in the second half of 2020. This means that NetEnt is increasing its initial estimate of potential synergies from the acquisition to around SEK 250 million annually.

Restructuring costs are expected to amount to approximately SEK 25 million, which will be reported as non-recurring items negatively affect operating profit for the first quarter of 2020.

The effects of COVID-19 are difficult to forecast, and conditions change rapidly. However, NetEnt’s operations have so far not been negatively affected by the pandemic outbreak. Revenues for the NetEnt Group have developed in line with market expectations during the first quarter of 2020 and are expected to be in the range of approximately SEK 490-500 million.

The World's economy measured in Gross Domestic Product (GDP) is expected to drop up to 10% this year and we believe NetEnt will not continue its growth with no negative effect as stated on Spincastle.

“We are now entering the next phase of the integration with Red Tiger, whose sellers are also becoming shareholders of NetEnt. The integration will unleash the full potential of our shared capabilities, create significant efficiency gains in games development and strengthen our position as the market leader in online casino”, says Therese Hillman, Group CEO of NetEnt.

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