Light & Wonder (NASDAQ: LNW) announced it will pay $850 million in cash for the charitable gaming properties of Grover Gaming, Inc. and G2 Gaming, Inc. The total cost may rise to $1.05 billion due to "a four-year revenue-linked earn-out of up to $200 million." 

The starting purchase prices suggest that the buyer is spending around 7.7 times Grover Charitable’s projected 2024 EBITDA and roughly 7.1 times the target’s adjusted run rate EBITDA.

"Under the terms of the agreement, Garrett will collaborate with Light & Wonder to help drive the continued success of the business over the next three years,” according to a statement. 

Light & Wonder anticipates that the deal will be completed in the second quarter and remarked that once finalized, the operation will be managed by a mix of employees from both LNW and Grover Gaming. 

What L&W Gains from Grover Charitable Acquisition 

Charitable gaming includes the financial risks and possible winnings found in conventional casino betting, but it is distinct as it isn’t managed by a commercial entity, tribal operator, or government agency. Instead, it’s operated by a charity that assigns gameplay to a firm like Grover. It can be available in different formats, such as lotteries, table games, and slot machines — a sector where Light & Wonder stands out as a leading company. 

Through Grover Charitable, Light & Wonder purchases a company that has over 10K gaming machines distributed throughout Kentucky, New Hampshire, North Dakota, Ohio, and Virginia. The private seller, established in 2013 by Garrett Blackwelder, is located in North Carolina. 

“Grover Charitable Gaming has developed long-standing and persistent relationships with charitable customers in the states that it operates, underpinned by a dedicated local team of service technicians and relationship managers,” according to the press release.

The agreement specifies that the seller will collaborate with Light & Wonder for three years after the transaction's completion to guarantee “the ongoing success of the business.” 

Light & Wonder States Agreement Will Not Increase Leverage 

Light & Wonder is funding the purchase of Grover Charitable with a combination of cash and debt, yet the firm informed investors that the acquisition does not jeopardize its aim of maintaining leverage between 2.5x and 3.5x. 

According to the unaudited financial outcomes for 2024, Grover Charitable recorded an adjusted EBITDA of $111 million with revenues of $135 million, suggesting that Light & Wonder is buying a lucrative company. The buyer confirmed its revised EBITDA projection of $1.4 billion for this year, informing investors that the estimate excludes possible increases from Grover Charitable. 

“Light & Wonder reaffirms its 2025 $1.4 billion Consolidated AEBITDA Target underpinned by continued strong organic growth across our existing businesses, and without any AEBITDA contribution from the acquisition of Grover Charitable Gaming,” said the company in the statement.