Pollard Banknote Limited Announces Interest in Acquiring INNOVA Gaming Group

Business News

Pllard Banknote Limited has announced that it has presented a proposal to INNOVA Gaming Group Inc to acquire 100% of the issued and outstanding common shares of INNOVA (“Shares“) at a price per Share of $2.10 , payable in cash (the “Proposed Transaction“). The proposed purchase price represents a significant premium of 39% to the closing price of the Shares on the Toronto Stock Exchange as of March 9, 2017 , and represents a compelling value proposition for INNOVA shareholders. Pollard Banknote also announced that it has entered into an agreement (the “Amaya Support Agreement“) with Amaya Inc. (“Amaya“) to support the Proposed Transaction in respect of the 8,180,000 common shares of INNOVA indirectly held by Amaya.

Amaya Support Agreement

Under the terms of the Amaya Support Agreement, Amaya has agreed to vote in favour of, and/or tender all of its Shares, representing approximately 40.45% of the outstanding Shares, to the Proposed Transaction in any form, including a plan of arrangement, take-over bid or other acquisition method. Pollard Banknote has agreed that completion of the Proposed Transaction will not be subject to financing, due diligence or any other condition requiring access to information from INNOVA, and that any acquisition agreement entered into by Pollard Banknote with INNOVA in connection with the Proposed Transaction will include customary “fiduciary out”, “right to match” and termination provisions.

The Amaya Support Agreement also contains customary covenants by Amaya that it not solicit or in any manner assist with any proposal for a transaction involving INNOVA other than the Proposed Transaction.

Amaya may terminate the Amaya Support Agreement in order to accept a superior offer, subject to the terms and conditions of the Amaya Support Agreement, including Pollard Banknote’s right to match. The Amaya Support Agreement may also be terminated by Amaya in certain other customary circumstances, including at any time on or after May 8, 2017 if Pollard Banknote has not entered into an acquisition agreement with INNOVA or commenced a take-over bid which has not been withdrawn.

Proposal to INNOVA

Pollard Banknote has presented the Proposed Transaction, on the terms described above, to the board of directors of INNOVA.

Pollard Banknote welcomes the opportunity to work with the board of directors of INNOVA and its advisors towards a board-supported transaction. There can be no assurance that INNOVA will enter into an agreement with Pollard Banknote to support the Proposed Transaction. If INNOVA does not enter into an agreement with Pollard Banknote, then Pollard Banknote will make a determination at such time whether or not to pursue the Proposed Transaction. However, there can be no assurance that Pollard Banknote will proceed with the Proposed Transaction in these circumstances.

Strategic Rationale

Pollard Banknote believes that INNOVA and its Diamond Game operating business represent unique assets that fit well within Pollard Banknote’s expanding product portfolio, and that the proposed acquisition of INNOVA would allow Pollard Banknote to further grow its partnership with lotteries seeking to expand their products and services.

By leveraging more than 30 years of experience in the lottery and charitable gaming market, Pollard Banknote believes it would provide an exceptional vehicle to increase and maximize the expansion of INNOVA`s product portfolio both to existing customers and by initiating new opportunities.  Pollard Banknote and INNOVA share many of the same customers and Pollard Banknote believes there are opportunities to leverage these relationships to grow the combined revenue base of Pollard Banknote and INNOVA.

Pollard Banknote believes that by leveraging key customer relationships and achieving economies and efficiencies of scale, if the Proposed Transaction is completed, the combined business would be better positioned to compete and grow in the lottery and charitable gaming sectors.

If the Proposed Transaction proceeds, Pollard Banknote expects to finance the Proposed Transaction by drawing on its syndicated credit facility and through additional subordinated debt financing to be provided by Pollard Equities Limited.