AGI Chart. What next?, page-51

Hi Jiantan

From your comment:

"Based on the average shares of the 21-50 holders, I've just missed the cut."

I take it that your holding size is just below the average of the 21-50 holders. They average just under $600,000 by my calculations, so my holding is nothing in comparison.


It is great to see that you have been "doing the rounds" and conducting some research yourself. When I say that I am perplexed by the yes vote, it should not be taken that I was entirely against the deal. Novomatic should reinvigorate AGI's content and hopefully help it to compete against ALL domestically and compete on the world stage. The worry is that Novomatic will utilize AGI's licensing to distribute their product in favour of AGI's and this is what I infer from the 110 page doc before the vote. Novomatic seems most interested in AGI as a distributor for their product to various states in the US. After reading through their statement of intentions for the first two years, the deal seems reasonable. I am only worried about what will happen after some of the agreements lapse. It should be said that Novomatic is a well run company and with around 10 times AGI's EBITDA it will offer significant clout to AGI's product offering. Novomatic also has a reputation to protect and as a private family run company if they were to rip the heart out of AGI they would do irreparable damage to their hopes of doing any similar deals in the future. So my thinking is with AGI being such a small fry they probably won't milk it for everything, instead if things are going well they will probably cross sell more of their machines through AGI licensing which will cap potential upside. The above is all my speculation and it is impossible to predict the future, so if posters have differing views that can be substantiated I would love to hear them!

I can understand your decision and obviously a large number of important shareholders voted with you. AGI is not of the same quality as ALL and the market is certainly pricing them that way. ALL is on 20ish times EBITDA and AGI is on 8 times. ALL is an excellent company but they are going to need incredible growth to justify that 20 times valuation. AGI on the other hand just needs to avoid stuffing up too badly and they should be ok.

Andrew