NEW YORK and LONDON, July 14,
2016 /PRNewswire/ -- Hydra Industries Acquisition Corp.
("Hydra") (NASDAQ: HDRA, HDRAU, HDRAW, HDRAR), a special purpose
acquisition company formed for the purpose of effecting a merger,
acquisition or similar business combination, announced today that
it has entered into a definitive agreement to acquire London based Inspired Gaming Group and its
affiliates ("Inspired" or the "Company") from funds managed by
Vitruvian Partners LLP (a London
headquartered private equity firm), and its co-investors
(collectively, the "Seller Group"). The transaction reflects a
valuation for Inspired of £200 million, including the Company's
indebtedness, but excluding transaction expenses as well as the
impact of Hydra's sponsor shares and subject to certain closing
adjustments. Based on the current USD/GBP exchange rate[1] the
equivalent transaction value is $264
million. Inspired's fiscal year end September 2016 Revenue and EBITDA are estimated
to be $110 million and $38 million, respectively[2], with the potential
to grow meaningfully, driven by a backlog of recurring revenue
contracts.
Consideration paid to the Seller Group for their interests in
the Company will consist of cash available at closing after
transaction expenses, and Hydra common shares issued at a price of
$10.00 per share. The Seller Group
may receive additional common shares as further consideration,
depending on future performance. The cash component of the
transaction will be funded by a $20
million private placement from Macquarie Capital in addition
to Hydra's cash in trust, which is currently approximately
$80 million. Assuming none of Hydra's
shares are redeemed for cash in trust, the Seller Group would
retain 35% ownership at closing. Certain liabilities of Inspired,
including existing credit facilities, are expected to remain in
place at closing.
Upon consummation of the transaction, Hydra's CEO Lorne Weil will become Executive Chairman while
Inspired's founder and current CEO Luke
Alvarez will continue in his leadership role as CEO in
addition to being named to the Board of Directors.
Lorne Weil commented, "We have
been searching for a compelling business that utilizes our skill
set to drive growth. We are excited to have the opportunity to
partner with Luke and his team as we work together to grow the
digital business through increased focus and the deployment of new
technology and content." Mr. Weil continued, "We look forward to
not only growing Inspired's business, but also using it as a
platform for potential opportunistic acquisitions of synergistic
businesses across a number of geographies. We believe the
combination of Inspired's management team and our experience in
utilizing technology and content to drive revenue growth in gaming
markets makes us well-positioned to enhance value for our
shareholders."
Luke Alvarez stated, "We are
excited to be partnering with Lorne
Weil and Hydra, while continuing our strong relationship
with Vitruvian. Lorne's history in the gaming industry and Hydra's
access to the public capital markets are the perfect combination to
take Inspired to the next level. Our ambition with Inspired has
always been to build a truly scaled and global leader in gaming
technology, which we believe is transitioning rapidly to an
all-digital environment. Our visions are aligned, and the Inspired
team is looking forward to working with Hydra to drive value
through organic and strategic growth."
Philip Russmeyer, Partner at Vitruvian, commented, "We have
enjoyed a strong and productive partnership with the management
team at Inspired and are delighted to support this transaction,
which will facilitate access to capital markets and support the
Company in the continued build-out of its market-leading
positions."
The proposed transaction has been unanimously approved by the
Boards of Directors of both Hydra and Inspired, and is expected to
close in October 2016, subject to
approval by Hydra's shareholders, required regulatory approvals and
other customary closing conditions. Immediately after the closing,
Hydra intends to change its name to Inspired Entertainment, Inc.
and will continue to trade on NASDAQ under the ticker INSE.
Macquarie Capital acted as M&A Advisor to Hydra.
Kramer Levin Naftalis & Frankel
LLP and Mishcon de Reya LLP acted as legal counsel to Hydra. Morgan
Stanley acted as M&A Advisor to Inspired. Dickson Minto W.S. and Willkie Farr & Gallagher LLP acted as legal
counsel to Inspired. Management was advised by Pinsent Masons LLP
and Proskauer Rose LLP.
Investor Conference Call Information
Hydra will host an investor conference call to discuss the
business combination on July 19, 2016
at 10:00 AM ET.
Interested parties may listen to the call via telephone by
dialing 1-877-870-4263, or for international callers,
1-412-317-0790. A telephone replay will be available shortly after
the call and can be accessed by dialing 1-877-344-7529
(confirmation code: 10090010), or for international callers,
1-412-317-0088 (confirmation code: 10090010).
An investor presentation will be made available at
www.hydraspac.com prior to the call.
About Hydra Industries Acquisition Corp.
Hydra is a blank check company formed for the purpose of
effecting a merger or other business combination with a target
company. Hydra was founded by gaming industry veteran Lorne Weil and raised $80
million on October 29, 2014 in
its Initial Public Offering. In addition, Macquarie Capital
co-sponsored Hydra's efforts to source acquisitions and provided a
$20 million forward equity commitment
which, with Hydra's existing cash in trust, will be used to fund
the proposed transaction.
Additional information can be found at www.hydraspac.com.
About Inspired Gaming Group
Inspired is a global games technology company, supplying Virtual
Sports, Mobile Gaming and server-based gaming systems with
associated terminals and digital content to regulated betting and
gaming operators around the world. Inspired currently operates more
than 25,000 digital gaming terminals and supplies its Virtual
Sports products in more than 30,000 venues and on over 200 websites
in 30 countries. Inspired employs over 800 employees in the UK and
elsewhere, developing and operating digital games and networks.
Additional information can be found at
www.inspiredgaminggroup.com
About Vitruvian Partners
Vitruvian is an independent European private equity firm that
invests in 'dynamic situations', i.e. companies characterized by
rapid growth and change, including buyouts and growth capital
investments. Vitruvian is currently deploying VIP II, a £1 billion
fund, and has offices in London,
Munich and Stockholm, as well as a presence on the U.S.
West Coast and in China. Target
sectors include technology and internet, financial and business
services, life sciences and healthcare, media and telecoms.
About Macquarie and Macquarie Capital
Macquarie Group ("Macquarie") is a global provider of banking,
financial, advisory, investment and funds management services.
Macquarie's main business focus is making returns by providing a
diversified range of services to clients. Macquarie acts on behalf
of institutional, corporate and retail clients and counterparties
around the world. Founded in 1969, Macquarie operates in more than
70 office locations in 28 countries. Macquarie employs
approximately 14,000 people and has assets under management of over
$367.4 billion (as of March 31, 2016).
Macquarie Capital comprises Macquarie Group's corporate
advisory, capital markets and principal investing capabilities.
Macquarie Capital's expertise spans a variety of industry sectors,
including telecommunications, media, entertainment, gaming,
financial institutions, industrials, energy, resources, real
estate, infrastructure, utilities and renewables.
Safe Harbor Language
This press release includes certain forward-looking statements,
including statements regarding future financial performance, future
growth and future acquisitions. These statements are based on
Hydra's and Inspired's managements' current expectations or beliefs
and are subject to uncertainty and changes in circumstances. Actual
results may vary materially from those expressed or implied by the
statements herein due to changes in economic, business, competitive
and/or regulatory factors, and other risks and uncertainties
affecting the operation of Inspired's business. These risks,
uncertainties and contingencies include, among others: business
conditions; changing interpretations of GAAP; inquiries and
investigations and related litigation; continued compliance with
government regulations; legislation or regulatory environments;
requirements or changes adversely affecting the business in which
Inspired is engaged; fluctuations in customer demand; management of
growth; intensity of competition from other providers of gaming
technology; general economic conditions; geopolitical events and
regulatory changes; fluctuations in currency exchange rates; the
possibility that the transaction does not close, including due to
the failure to receive required security holder approvals or
regulatory approvals or the failure of other closing conditions;
and other factors set forth in Hydra's past or future filings with
the Securities and Exchange Commission ("SEC"), including the proxy
statement expected to be filed in connection with the proposed
transaction. The information set forth herein should be read in
light of such risks. Further, investors should keep in mind that
certain of Inspired's financial results are unaudited and do not
conform to SEC Regulation S-X. Additionally, it contains a non-GAAP
financial measure (EBITDA) and as a result such information will be
presented differently in Hydra's proxy statement relating to the
proposed transaction and may fluctuate materially depending on many
factors. Accordingly, Inspired's financial results in any
particular period may not be indicative of future results. Neither
Hydra nor Inspired is under any obligation to, and expressly
disclaims any obligation to, update or alter any forward-looking
statements, whether as a result of new information, future events,
changes in assumptions or otherwise. Hydra's filings with the SEC
can be obtained, without charge, at the SEC's internet site
(http://www.sec.gov).
This news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there by any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No portion of Hydra's or
Inspired's websites is incorporated by reference into or otherwise
deemed to be a part of this news release.
[1] USD/GBP exchange rate of $1.32/£1.00
[2] Based on preliminary US GAAP estimates
Logo - http://photos.prnewswire.com/prnh/20160713/389527LOGO