Excessive-flying Rush Avenue Interactive (NYSE: RSI) most likely received’t command $1.5 billion in a takeover supply over the close to time period.
A Rush Avenue Interactive commercial. The corporate most likely received’t fetch $1.5 billion in a takeover, says an analyst. (Picture: X)
That’s the take of Susquehanna analyst Joseph Stauff who, in a brand new report back to shoppers on Monday, downgraded shares of the net sportsbook operator to “impartial” from “constructive” whereas elevating is value goal on the shares to $6 from $5. That new forecast is barely above the inventory’s closing value of $5.84 on March 1.
Stauff identified that Rush Avenue Interactive’s latest inventory surge — it’s up virtually 48% over the previous 12 months — may make the title much less interesting to potential suitors, and {that a} $1.5 billion price ticket could be unattractive to BetMGM and Caesars Leisure (NASDAQ: CZR).
RSI has lengthy been rumored to be a buyout goal, however $1.5 billion isn’t that a lot of a premium to the operator’s present market worth of about $1.30 billion, indicating the previous determine would possibly really be gentle ought to the gaming firm’s administration crew resolve to hearken to presents.
Rush Avenue Interactive Might Be Open to Takeover
Final Could, RSI CEO Richard Schwartz advised analysts and buyers he’d be open to having mergers and acquisitions discussions, however since then, the inventory has practically doubled. That might be an indication the operator doesn’t have to run into the arms of a suitor.
Moreover, neither BetMGM nor Caesars have publicly indicated RSI is a goal of theirs. It’s believable, on the premise of these two operators trailing rivals DraftKings (NASDAQ: DKNG) and FanDuel by large margins, that the potential buy of RSI may assist them add market share.
Relying on value, Rush Avenue Interactive might be an alluring goal for any variety of potential patrons owing to the operator’s sturdy iGaming footprint and its publicity to fast-growing sports activities wagering markets in Latin America. That would give the corporate a leg up as Brazil — the biggest economic system within the area — strikes towards awarding sports activities betting permits.
Within the US, Chicago-based RSI operates below the BetRivers and PlaySugarHouse manufacturers, and is at the moment accessible with cellular or retail companies in Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, New York, Pennsylvania, Virginia, and West Virginia. The agency additionally presents sports activities wagering in Ontario, Canada.
Illinois Might Be Problematic for Rush Avenue Interactive
Past lack of takeover curiosity on the aforementioned $1.5 billion value level, Stauff mentioned shares of RSI might be hampered over the close to time period on account of points in its dwelling state.
Not solely does Illinois Gov. J.B. Pritzker (D) need to plug shortfalls partially by elevating the state’s sports activities betting tax to 35% from 15%, however regardless of the state’s fiscal wants, iGaming seems unlikely to move there this 12 months.
Some gaming firms are pitching iGaming as an alternative choice to the upper sports activities betting tax, noting the previous may generate as a lot as $775 million in annual income for the state, but it surely stays to be seen if Pritzker is open to that compromise.
