Here’s a delightful case study in how not to execute a take-private transaction: Novomatic, already holding a commanding 66.59% stake in Ainsworth Game Technology, just spectacularly failed to convince enough remaining shareholders to accept its A$1.00 per share offer. The bid officially expired at 7pm Sydney time on February 6th, falling short of the 75% approval threshold required under Australian takeover rules.
For those keeping score at home, this is what happens when a majority shareholder assumes minority investors will simply roll over because, well, they’re the minority. Spoiler alert: they don’t, especially when family members with intimate knowledge of the business start doing their own math.
The Real Estate Reality Check
The fatal flaw in Novomatic’s approach became glaringly obvious when Kjerulf Ainsworth—a member of the founding family and someone who presumably knows where the bodies are buried—publicly challenged the valuation. His specific gripe? The company’s Florida and Nevada properties were dramatically undervalued in the takeover documentation.
According to Ainsworth’s analysis shared with the Australian Financial Review, these properties were worth approximately A$116.1 million, compared to the paltry A$68.7 million figure used in Novomatic’s bid calculations. That’s not a rounding error—that’s a A$47.4 million discrepancy, or roughly 69% higher than the bid documentation suggested.
When a shareholder starts asking pointed questions like « when were these properties last valued, by whom, and using what methodology, » you’re no longer in friendly takeover territory. You’re in forensic accounting land, where deals go to die.
The Systemic Problem: Majority Shareholder Myopia
This failure illustrates a broader issue in gaming industry M&A: controlling shareholders often conflate control with carte blanche. Novomatic apparently believed that owning two-thirds of Ainsworth meant the remaining third would fall in line with whatever price they deemed fair. This is the corporate equivalent of assuming your passengers will enjoy wherever you’re driving simply because you control the steering wheel.
Australian takeover regulations exist precisely to prevent this kind of strong-arming. The 75% threshold isn’t arbitrary—it’s designed to ensure that take-private transactions genuinely reflect fair value, not just the convenience of the acquirer. Novomatic discovered this the hard way.
The Austrian slots giant had every incentive to lowball the offer. After all, they already controlled the company and presumably had access to all the data. But that same access should have told them that sophisticated minority shareholders—particularly those with the Ainsworth name—wouldn’t simply accept management’s valuation when their own analysis suggested something quite different.
Context: A Company in Transition (and Turmoil)
The timing of this failed takeover couldn’t be more awkward for Ainsworth. The company recently disclosed a projected underlying profit of A$21.0 million for FY25, slightly down from earlier expectations of A$21.5 million. More concerning is the A$43.1 million non-cash goodwill impairment related to its North American acquisitions—Nova Technologies and MTC Gaming Inc.—which are underperforming.
EBITDA is projected at A$48.0 million, essentially flat year-over-year. In other words, this is a business treading water in its core operations while taking significant write-downs on its growth initiatives. Not exactly the profile of a company whose shareholders should be rushing to exit at the first opportunity.
Adding to the operational chaos, former CEO Harald Neumann—a Novomatic appointee—resigned in October 2025 after Nevada gaming regulators rejected his license application. The reason? Prior corruption investigations by Austrian authorities, though no charges were filed. Nothing says « smooth transition » like your CEO getting blackballed by gambling regulators over decade-old corruption probes.
What This Means for Minority Shareholders
In the short term, Ainsworth shareholders who rejected the deal are stuck in limbo. They remain minority investors in a company controlled by Novomatic, which now has zero incentive to maximize shareholder value for anyone but itself. Novomatic can continue to extract value through operational control, transfer pricing, and strategic decisions that benefit the parent company rather than the listed entity.
The rejected bid also sends a clear signal: if you’re going to take a company private, do your homework on valuation. Minority shareholders, particularly those with industry expertise and family legacy considerations, aren’t simply line items on a spreadsheet. They’re real people with real opinions about what their assets are worth, and when those opinions differ materially from your offer price, you’ve got a problem.
The Broader Industry Implications
This failed takeover reflects a larger trend in gaming M&A: the increasing sophistication of minority investors and their willingness to challenge controlling shareholders. Gone are the days when a decent premium to the 30-day VWAP was sufficient to close a deal. Investors now demand comprehensive valuations, independent assessments, and transparency around key assets—particularly real estate, which often represents hidden value in gaming companies.
For Novomatic, this represents a strategic setback. The company clearly wanted to simplify its corporate structure by taking Ainsworth fully private, eliminating the regulatory and disclosure requirements that come with maintaining a public listing. That strategy now lies in tatters, and any future attempt will need to come with a significantly higher price tag—and probably independent property valuations that don’t insult the intelligence of the founding family.
The message to other would-be acquirers is simple: control doesn’t equal ownership, and ownership doesn’t come cheap when you’ve underestimated the value of what you’re trying to buy. Novomatic learned this lesson the expensive way—through a failed bid, damaged relationships with minority shareholders, and the ongoing complications of managing a partially owned public company that clearly doesn’t want to be acquired at the proposed price.
In an industry built on calculated risk and probability assessment, Novomatic somehow managed to misread both the odds and the opposition. That’s not just bad M&A execution—it’s almost poetic.
