UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

 

Filed by the Registrant
   
Filed by a party other than the Registrant

 

Check the appropriate box:

 

  Preliminary Proxy Statement
     
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
     
  Definitive Proxy Statement
     
  Definitive Additional Materials
     
  Soliciting Material under §240.14a-12

 

GAN Limited

(Name of Registrant as Specified in its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check all boxes that apply):

 

  No fee required
     
  Fee paid previously with preliminary materials
     
  Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 
 

 

GAN Limited

400 Spectrum Center Drive, Suite 1900

Irvine, CA 92618

 

January 4, 2024

 

Dear GAN Limited Shareholder:

 

On behalf of the board of directors and management, we cordially invite you to a special general meeting of the shareholders of GAN Limited, a Bermuda exempted company limited by shares (“GAN,” “we,” “us,” “our,” or the “Company”), to be held in a virtual meeting format via the Internet, originating from GAN’s headquarters located at 400 Spectrum Center Drive, Suite 1900, Irvine, CA 92618, on February 13, 2024, at 10:00 a.m. (Pacific Time), and at any adjournment or postponement thereof. We refer to such meeting and any adjournment or postponement thereof as the “special general meeting.”

 

On November 7, 2023, GAN entered into an Agreement and Plan of Merger with SEGA SAMMY CREATION INC., a Japanese corporation (“SSC”), and Arc Bermuda Limited, a Bermuda exempted company limited by shares and a wholly-owned subsidiary of SSC (“Merger Sub”). We refer to the Agreement and Plan of Merger, as it has been and as it may be amended from time to time, as the “merger agreement”. Pursuant to the merger agreement and the statutory merger agreement attached as an exhibit to the merger agreement (which we refer to as the “statutory merger agreement”), Merger Sub will be merged with and into GAN (which we refer to as the “merger”), the separate corporate existence of Merger Sub will cease and GAN will continue as the surviving company in the merger and a wholly-owned subsidiary of SSC.

 

Pursuant to the terms and subject to the conditions set forth in the merger agreement and the statutory merger agreement, at the effective time of the merger (which we refer to as the “effective time”), each ordinary share of GAN, $0.01 par value per ordinary share (which we refer to as the “ordinary shares” and, each, as an “ordinary share”), issued immediately prior to such time (other than any issued ordinary share owned by SSC, Merger Sub, or any direct or indirect wholly-owned subsidiary of SSC, Merger Sub or GAN, or owned by GAN as a treasury share) will be automatically canceled and converted into the right to receive, with respect to each such ordinary share, $1.97 in cash, without interest and less any applicable tax withholding (which we refer to as the “merger consideration”). The ordinary shares are currently listed on The Nasdaq Capital Market under the symbol “GAN”. The merger consideration represents a premium of over 120% to the closing price of an ordinary share on The Nasdaq Capital Market on November 7, 2023, the last full trading day prior to the public announcement that the parties entered into the merger agreement.

 

If the merger is completed, GAN will become a privately-held company wholly owned by SSC. SSC is a subsidiary of SEGA SAMMY HOLDINGS INC., which is the holding company of the SEGA SAMMY Group.

 

At the special general meeting, holders of ordinary shares will be asked to consider and vote upon proposals to: (1) approve and adopt the merger agreement, the statutory merger agreement required in accordance with Section 105 of the Bermuda Companies Act 1981, as amended (which we refer to as the “Bermuda Companies Act”), and the consummation of the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger (which we refer to as the “merger proposal”); (2) approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to GAN’s named executive officers in connection with the merger, as described in the accompanying proxy statement (which we refer to as the “compensation advisory proposal”); and (3) approve an adjournment of the special general meeting, if necessary or appropriate, to permit us to solicit additional proxies in the event that there are insufficient votes to approve the merger proposal at the special general meeting (which we refer to as the “adjournment proposal”). Holders of ordinary shares will be entitled to vote on all three proposals.

 

The GAN board of directors unanimously (a) determined that the merger consideration constitutes fair value for each ordinary share in accordance with the Bermuda Companies Act, (b) determined that the terms of the merger agreement, the statutory merger agreement, the merger and the other agreements and transactions contemplated by the merger agreement and the statutory merger agreement are in the best interests of GAN and its shareholders, (c) approved and declared advisable GAN’s execution, delivery and performance of the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, (d) directed that the merger agreement and the statutory merger agreement be submitted to GAN shareholders for adoption and approval and (e) recommends that GAN shareholders vote in favor of adoption and approval of the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger. As more fully described in the accompanying proxy statement, the GAN board of directors made these determinations in accordance with and upon the unanimous recommendation of its committee comprised solely of independent directors and after consultation with GAN’s management and independent legal and financial advisors and consideration of a number of factors. Accordingly, the GAN board of directors unanimously recommends that GAN shareholders vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.

 

 
 

 

In considering the recommendations of the GAN board of directors, shareholders should be aware that the executive officers and directors of GAN have certain interests in the merger that may be different from, or in addition to, the interests of GAN shareholders generally. Those interests are more fully described in the accompanying proxy statement. The GAN board of directors was aware of those interests and considered them, among other matters, in making its recommendations.

 

Assuming a quorum is present at the special general meeting, the approval of each of the three proposals at the special general meeting requires the affirmative vote of a simple majority of the votes cast by holders of ordinary shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with GAN’s bye-laws. Approval of the merger proposal by GAN shareholders is necessary to complete the merger.

 

The accompanying proxy statement describes provisions of the merger agreement and of the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, and provides information about the special general meeting. A copy of each of the merger agreement and the statutory merger agreement is attached as Annex A (the merger agreement), Annex A-1 (the statutory merger agreement), and Annex A-2 (amendment to the merger agreement) to the proxy statement. We encourage you to carefully read the entire proxy statement and its annexes, including the merger agreement, and the documents referred to or incorporated by reference in the proxy statement in their entirety. You may also obtain additional information about GAN from documents GAN files with the United States Securities and Exchange Commission.

 

Your vote is very important. Regardless of the number of ordinary shares you own, and whether or not you plan to attend the special general meeting, we hope that you will vote as soon as possible. If you are the owner of record of ordinary shares, you will find enclosed a proxy card or cards and an envelope in which to return the card(s). Whether or not you plan to attend the special general meeting, please sign, date and return your enclosed proxy card(s), or submit your proxy via the Internet or over the phone, as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. You can revoke your proxy before the special general meeting and issue a new proxy as you deem appropriate. If you wish to revoke your proxy, you will find the procedures to follow in the accompanying proxy statement.

 

If you hold your ordinary shares in “street name” through a broker, bank or other nominee, you should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your ordinary shares. If you do not follow those instructions, your ordinary shares will not be voted at the special general meeting.

 

If you have any questions or need assistance voting your shares, please contact Morrow Sodali LLC, GAN’s proxy solicitor, in connection with the special general meeting:

 

Morrow Sodali LLC

333 Ludlow Street, 5th Floor, South Tower

Stamford, CT 06902

Toll-Free: (800) 662-5200

[email protected]

 

Thank you in advance for your cooperation and continued support.

 

  Sincerely,
   
  /s/ Seamus McGill
  Seamus McGill
  Interim Chief Executive Officer

 

The accompanying proxy statement is dated January 4, 2024, and is first being mailed to GAN shareholders on or about January 9, 2024.

 

None of the United States Securities and Exchange Commission, any state securities regulatory agency, the Bermuda Registrar of Companies or the Bermuda Monetary Authority has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

 

The accompanying proxy statement will not be filed with any government or regulatory authority in Bermuda. Neither the Bermuda Monetary Authority nor the Bermuda Registrar of Companies accepts any responsibility for GAN’s financial soundness or the correctness of any of the statements made or opinions expressed in the accompanying proxy statement.

 

 
 

 

GAN Limited

400 Spectrum Center Drive, Suite 1900

Irvine, CA 92618

 

     
  NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS  
     
  To be Held on February 13, 2024  

 

January 4, 2024

 

To GAN Limited Shareholders:

 

On November 7, 2023, GAN Limited, a Bermuda exempted company limited by shares (which we refer to as “GAN,” “we,” “us,” “our,” or the “Company”), entered into an Agreement and Plan of Merger with SEGA SAMMY CREATION INC., a Japanese corporation (“SSC”), and Arc Bermuda Limited, a Bermuda exempted company limited by shares and a wholly-owned subsidiary of SSC (“Merger Sub”). We refer to the Agreement and Plan of Merger, as it has been and as it may be amended from time to time, as the “merger agreement”. Pursuant to the terms and subject to the conditions set forth in the merger agreement and the statutory merger agreement attached as an exhibit to the merger agreement (which we refer to as the “statutory merger agreement”), Merger Sub will be merged with and into GAN (which we refer to as the “merger”), the separate corporate existence of Merger Sub will cease and GAN will continue as the surviving company in the merger and a wholly-owned subsidiary of SSC.

 

Notice is hereby given that a special general meeting of shareholders of GAN (which we refer to, including any adjournment or postponement thereof, as the “special general meeting”) will be held on February 13, 2024 at 10:00 a.m. (Pacific Time) solely in a virtual meeting format via the Internet at www.virtualshareholdermeeting.com/GAN2024SM, originating from GAN’s headquarters located at 400 Spectrum Center Drive, Suite 1900, Irvine, CA 92618 for the following purposes:

 

  Proposal 1: To consider and vote on a proposal to approve and adopt the merger agreement, the statutory merger agreement required pursuant to Section 105 of the Bermuda Companies Act 1981, as amended (which we refer to as the “Bermuda Companies Act”), and the consummation of the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger;
     
  Proposal 2: To consider and vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to our named executive officers in connection with the merger, as described in the accompanying proxy statement; and
     
  Proposal 3: To consider and vote on a proposal to approve the adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special general meeting to approve Proposal 1.

 

Consummation of the merger is conditioned on, among other things, the approval of Proposal 1 (which we refer to as the “merger proposal”), but is not conditioned on the approval of Proposal 2 (which we refer to as the “compensation advisory proposal”) or Proposal 3 (which we refer to as the “adjournment proposal”).

 

Only holders of record of our ordinary shares, par value $0.01 per share (which we refer to as “ordinary shares” and, each, as an “ordinary share”), at the close of business on January 2, 2024 (which we refer to as the “record date”), will be entitled to receive notice of and to vote on the proposals described above at the special general meeting.

 

Your vote is important, regardless of the number of ordinary shares you own. At the special general meeting, the presence of two or more persons representing in the aggregate, in person or by proxy, in excess of 50% of the total issued ordinary shares as of the record date throughout the meeting will form a quorum for the transaction of business. Assuming a quorum is present, the merger proposal cannot be approved (and the merger cannot be completed) without the affirmative vote (in person or by proxy) of a simple majority of votes cast by holders of ordinary shares present (in person or by proxy) at the special general meeting. Our ordinary shares are entitled to one vote per share.

 

I
 

 

Even if you plan to attend the special general meeting, we request that you sign, date and return your enclosed proxy card(s), or submit your proxy by using a toll-free telephone number or the Internet, as soon as possible and thus ensure that your shares will be represented at the meeting and voted in accordance with your instructions if you are unable to attend. We have provided instructions in the accompanying proxy statement and on the proxy card and voting instruction form for using the toll-free telephone number or the Internet to submit your proxy. You can revoke your proxy before the special general meeting and issue a new proxy as you deem appropriate. If you wish to revoke your proxy, you will find the procedures to follow in the accompanying proxy statement.

 

If you hold your ordinary shares in “street name” through a broker, bank or other nominee, you will need to follow the instructions provided by such broker, bank or nominee regarding how to instruct it to vote your ordinary shares at the special general meeting.

 

The GAN board of directors unanimously recommends that you vote “FOR” the merger proposal, “FOR” the compensation advisory proposal, and “FOR” the adjournment proposal, each of which is described in more detail in the accompanying proxy statement.

 

For purposes of Section 106(2)(b)(i) of the Bermuda Companies Act, the GAN board of directors considers $1.97 in cash, without interest and less any applicable withholding taxes, to represent the fair value for each issued ordinary share. GAN shareholders of record who do not vote in favor of the merger proposal and who are not satisfied that they have been offered fair value for their shares have the right to apply to the Supreme Court of Bermuda pursuant to Section 106(6) of the Bermuda Companies Act to have the fair value of their shares appraised. GAN shareholders intending to exercise such appraisal rights MUST file their application for the appraisal of the fair value of their shares with the Supreme Court of Bermuda within ONE MONTH of the giving of the notice convening the special general meeting.

 

  By Order of the Board of Directors,
   
  /s/ Sylvia Tiscareño
January 4, 2024 Sylvia Tiscareño
Irvine, California Chief Legal Officer & Corporate Secretary

 

II
 

 

TABLE OF CONTENTS

 

SUMMARY 1
Parties to the Merger 1
The Merger 2
Merger Consideration 2
The Statutory Merger Agreement 3
The Special General Meeting 3
Expenses of Proxy Solicitation 6
Certain Effects of the Merger on GAN 6
Effect on GAN if the Merger is Not Completed 6
Background of the Merger 6
Recommendation of the GAN Board of Directors 6
Opinion of GAN’s Financial Advisor 6
No Financing Condition 7
Interests of Certain Persons in the Merger 7
The Merger Agreement 7
Market Price of GAN Ordinary Shares 11
Dissenting Shares 11
Delisting and Deregistration of GAN Shares 11
Material U.S. Federal Income Tax Consequences 11
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL GENERAL MEETING 12
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION 19
PARTIES TO THE MERGER 21
GAN 21
SSC 21
Arc Bermuda Limited 21
THE MERGER 22
Certain Effects of the Merger on GAN 22
Effect on GAN if the Merger is Not Completed 22
Merger Consideration 22
Background of the Merger 23
GAN’s Reasons for the Merger and Recommendation of the GAN Board of Directors 28
Opinion of GAN’s Financial Advisor 33
Certain GAN Prospective Financial Information 40
No Financing Condition 41
Effective Time of Merger 42
Interests of GAN’s Directors and Executive Officers in the Merger 42

 

-i-
 

 

Regulatory Approvals 49
Payment of Merger Consideration 50
Delisting and Deregistration of Ordinary Shares 50
Dissenters’ Rights of Appraisal for GAN Shareholders 50
THE MERGER AGREEMENT 51
The Merger 51
Effects of the Merger 51
Closing; Effective Time 52
Conditions to Completion of the Merger 52
Efforts to Obtain Required Shareholder Approvals 55
No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements 55
Dissenting Shares 59
Treatment of GAN Equity Awards 59
Efforts to Complete the Merger 60
Termination of the Merger Agreement 62
Expenses and Termination Fees 64
Conduct of Business Pending the Completion of the Merger 65
Directors and Officers of the Surviving Company 68
Indemnification; Directors’ and Officers’ Insurance 68
Amendment and Waiver 68
No Third Party Beneficiaries 69
Remedies; Specific Enforcement 69
Representations and Warranties 69
Other Covenants and Agreements 70
Governing Law; Jurisdiction 71
MARKET PRICE OF ORDINARY SHARES 72
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 73
Changes in Control 73
APPRAISAL RIGHTS 74
DELISTING AND DEREGISTRATION OF ORDINARY SHARES 76
THE SPECIAL GENERAL MEETING 76
Date, Time and Place 76
Purposes of the Special General Meeting 76
Record Date 76
Quorum 76
Required Vote 77

 

-ii-
 

 

Share Ownership of Our Directors and Executive Officers 77
Voting 77
Voting Procedures 77
Abstentions and “Broker Non-Votes” 78
Revocation of Proxies 78
Board of Directors’ Recommendation 79
Expenses of Proxy Solicitation 79
Other Matters 79
Important Notice Regarding the Availability of Proxy Materials for the Special General Meeting 79
Questions and Additional Information 79
PROPOSAL 1 — APPROVAL OF THE MERGER PROPOSAL 80
PROPOSAL 2 — APPROVAL OF THE COMPENSATION ADVISORY PROPOSAL 81
PROPOSAL 3 — APPROVAL OF THE ADJOURNMENT PROPOSAL 82
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES 83
Tax Consequences of the Merger 84
Passive Foreign Investment Company (“PFIC”) 84
Backup Withholding and Information Reporting 84
FUTURE SHAREHOLDER PROPOSALS 85
Requirements for Shareholder Proposals to be Considered for Inclusion in our Proxy Materials 85
Requirements for Shareholder Nominations to be Brought Before an Annual General Meeting. 85
HOUSEHOLDING OF THE PROXY MATERIALS 85
WHERE YOU CAN FIND MORE INFORMATION 86
MISCELLANEOUS 87
Annex A – Agreement and Plan of Merger A-1
Annex A-1 – Statutory Merger Agreement A-1-1
Annex A-2 – Amendment to Agreement and Plan of Merger dated December 15, 2023 A-2-1
Annex B – Opinion of B. Riley Securities, Inc. B-1

 

-iii-
 

 

 

SUMMARY

 

This summary highlights material information in this proxy statement. To fully understand the proposals to be considered and voted upon at the special general meeting and for a more complete description of the legal terms of the merger (as defined below), you should carefully read this entire proxy statement, including the annexes and documents incorporated by reference herein, and the other documents to which we refer you in their entirety. For information on how to obtain the documents that we file with the United States Securities and Exchange Commission (which we refer to as the “SEC”), please see the section of this proxy statement titled “Where You Can Find More Information.”

 

The proxy statement is dated January 4, 2024, and is first being mailed to shareholders of GAN Limited on or about January 9, 2024.

 

Parties to the Merger (Page 21)

 

GAN Limited

400 Spectrum Center Drive, Suite 1900

Irvine, California 92618

(833) 565-0550

 

GAN Limited (which we refer to as “GAN,” “we,” “us,” “our,” or the “Company” before the merger and as the “surviving company” following the merger) is a Bermuda exempted company limited by shares and, through its subsidiaries, operates in two lines of business. GAN is a business-to-business (“B2B”) supplier of enterprise Software-as-a-Service (“SaaS”) solutions for online casino gaming, commonly referred to as iGaming, and online sports betting applications. Beginning with GAN’s January 2021 acquisition of Vincent Group p.l.c., a Malta public limited company (“Coolbet”), GAN is also a business-to-consumer (“B2C”) developer and operator of an online sports betting and casino platform, which offers consumers in select markets in Northern Europe, Latin America and Canada a digital portal for engaging in sports betting, online casino games and poker.

 

GAN’s ordinary shares are listed on The Nasdaq Capital Market under the symbol “GAN”.

 

For additional information on GAN and its business, including how to obtain the documents GAN has filed with the SEC, see the section of this proxy statement titled “Where You Can Find More Information.”

 

SEGA SAMMY CREATION INC.

Sumitomo Fudosan Osaki Garden Tower

1 Chome-1-1 Nishishinagawa

Shinagawa City, Tokyo 141-0033 Japan

 

SEGA SAMMY CREATION INC. (which we refer to as “SSC”), is a Japanese corporation established in June 2013. SSC, together with its wholly-owned subsidiary SEGA SAMMY CREATION USA Inc., develop, manufacture and distribute land-based and online/social casino gaming products and software. SSC is a wholly-owned subsidiary of SEGA SAMMY HOLDINGS INC. (which we refer to as “SEGA SAMMY HOLDINGS”). SEGA SAMMY HOLDINGS, a Japanese corporation, is the holding company of the SEGA SAMMY Group, a group of companies comprising the Entertainment Contents Business, which offers a diversity of fun through consumer and arcade game content, toys and animation; the Pachislot and Pachinko Machines Business, which conducts everything from development to sales of Pachinko/Pachislot machines; and the Resort Business, which develops and operates resort facilities in Japan and overseas. For the six months ended September 30, 2023 and the fiscal year ended March 31, 2023, SEGA SAMMY HOLDINGS reported Japanese GAAP1 ordinary income of ¥42.0 billion and ¥49.4 billion, respectively. SEGA SAMMY HOLDINGS reported total net assets of ¥356.6 billion and ¥331.3 billion as of September 30, 2023 and March 31, 2023, respectively. SEGA SAMMY HOLDINGS’ shares are listed on the Tokyo Stock Exchange under the ticker code 6460. SEGA SAMMY HOLDINGS’ American Depository Receipts are traded in the over-the-counter (OTC) market under the symbol “SGAMY.”

 

Arc Bermuda Limited

c/o SEGA SAMMY CREATION INC.

Sumitomo Fudosan Osaki Garden Tower

1 Chome-1-1 Nishishinagawa

Shinagawa City, Tokyo 141-0033 Japan

 

 

1 SEGA SAMMY HOLDINGS’ financial statements are prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law of Japan and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”).

 

 

-1-
 

 

 

Arc Bermuda Limited (which we refer to as “Merger Sub”), a Bermuda exempted company limited by shares, is a wholly-owned subsidiary of SSC formed solely for purposes of entering into the merger agreement and the statutory merger agreement (as such terms are defined below) and, subject to the terms and conditions thereof, completing the transactions contemplated by the merger agreement and the statutory merger agreement. Upon completion of the merger, Merger Sub will be merged with and into GAN, the separate corporate existence of Merger Sub will cease and GAN will continue as the surviving company in the merger and a wholly-owned subsidiary of SSC.

 

The Merger (Page 22)

 

On the terms and subject to the conditions of that certain Agreement and Plan of Merger, entered into on November 7, 2023, by and among GAN, SSC and Merger Sub, as amended by that certain Amendment to Agreement and Plan of Merger dated December 15, 2023 (we refer to the agreement and plan of merger, as it has been and as it may be amended from time to time, as the “merger agreement”), and the statutory merger agreement attached as an exhibit to the merger agreement (which we refer to as the “statutory merger agreement”) required in accordance with Section 105 of the Bermuda Companies Act 1981, as amended (which we refer to as the “Bermuda Companies Act”), Merger Sub will merge with and into GAN, with GAN continuing as the surviving company in the merger (which we refer to as the “merger”). GAN, as the surviving company in the merger, will continue in existence as a Bermuda exempted company limited by shares and as a wholly owned subsidiary of SSC. As a result of the merger, under Bermuda law, from and after the effective time of the merger, GAN’s and Merger Sub’s respective undertakings, properties and liabilities will become vested in GAN as the surviving company in the merger. The closing of the merger (which we refer to as the “closing”) will occur within five business days following the satisfaction or (to the extent permitted by applicable law) waiver of all the closing conditions set forth in the merger agreement (other than those conditions that, by their nature, are to be satisfied at the closing, but subject to the satisfaction or, to the extent permitted by applicable law, waiver of those conditions) or at such other date and time as GAN and SSC may agree. We refer to the date on which the closing occurs as the “closing date”. The merger will be effective upon the issuance of a certificate of merger by the Bermuda Registrar of Companies and at the time and date shown on such certificate of merger (which we refer to as the “effective time”).

 

Merger Consideration (Page 22)

 

At the effective time, each ordinary share of GAN, $0.01 par value per share (which we refer to as an “ordinary share”), issued immediately prior to the effective time (other than any issued ordinary share that is owned by SSC, Merger Sub, or any direct or indirect wholly-owned subsidiary of SSC, Merger Sub or GAN, or owned by GAN as a treasury share) will be automatically canceled and converted into the right to receive $1.97 in cash, without interest and less any required withholding taxes (which we refer to as the “merger consideration”). The merger consideration represents a premium of over 120% to the closing price of an ordinary share on The Nasdaq Capital Market on November 7, 2023, the last full trading day prior to the public announcement that the parties entered into the merger agreement. All ordinary shares converted into the right to receive the merger consideration will no longer be issued and will be automatically canceled and will cease to exist as of the effective time, and will thereafter represent only the right to receive the merger consideration.

 

As described further in the section of this proxy statement titled “The Merger – Payment of Merger Consideration” beginning on page 50, prior to the effective time, SSC will appoint a paying agent reasonably acceptable to GAN for the payment and delivery of the aggregate merger consideration. At or prior to the effective time, SSC will deposit or cause to be deposited with the paying agent cash in an amount sufficient to pay the aggregate merger consideration. As promptly as reasonably practicable after the effective time, but in no event later than three business days after the effective time, SSC will cause the paying agent to send a letter of transmittal to each holder of record of ordinary shares as of immediately prior to the effective time (all of which are in uncertificated book-entry form) and instructions for effecting the surrender of book-entry shares in exchange for the merger consideration. Upon the completion of such applicable procedures and without any action by holders of book-entry shares, the paying agent will deliver to the holder the merger consideration that the holder is entitled to receive and the book-entry shares will be canceled immediately. No interest will be paid or accrue on the merger consideration.

 

 

-2-
 

 

 

After the completion of the merger, under the terms of the merger agreement and the statutory merger agreement, you will have the right to receive the merger consideration, but you will no longer have any rights as a GAN shareholder (except that GAN shareholders who have properly demanded appraisal for their shares in accordance with, and have complied in all respects with, the Bermuda Companies Act will be entitled only to those rights granted under the Bermuda Companies Act as described in the sections of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal for GAN Shareholders” beginning on page 50, “The Merger Agreement — Dissenting Shares” beginning on page 59 and “Appraisal Rights” beginning on page 74).

 

The Statutory Merger Agreement (Page 3)

 

The statutory merger agreement, together with the merger agreement, governs the legal effects of the merger under Bermuda law. A copy of the form of statutory merger agreement is attached as Annex A-1 to this proxy statement.

 

The Special General Meeting (Page 76)

 

Time, Place and Purpose of the Special General Meeting (Page 76)

 

A special general meeting of shareholders of GAN (which we refer to, including any adjournment or postponement thereof, as the “special general meeting”) will be held on February 13, 2024 starting at 10:00 a.m. (Pacific Time) solely in a virtual meeting format via the Internet at www.virtualshareholdermeeting.com/GAN2024SM. The special general meeting will originate from GAN’s headquarters located at 400 Spectrum Center Drive, Suite 1900, Irvine, CA 92618 and will begin promptly at the designated start time. Participants will be able to log in 15 minutes prior to the designated start time and are encouraged to do so in case of any technical difficulties.

 

At the special general meeting, GAN shareholders will be asked to consider and vote on each of the following proposals:

 

  Proposal 1 (the “merger proposal”): to approve and adopt the merger agreement, the statutory merger agreement and the consummation of the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger;
     
  Proposal 2 (the “compensation advisory proposal”): to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to GAN’s named executive officers in connection with the merger, as described in this proxy statement; and
     
  Proposal 3 (the “adjournment proposal”): to approve an adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies, if there are insufficient votes at the time of the special general meeting to approve the merger proposal.

 

Holders of ordinary shares issued as of the record date (as defined below) will be entitled to vote on each of the above proposals.

 

Consummation of the merger is conditioned on, among other things, the approval of the merger proposal, but is not conditioned on the approval of either the compensation advisory proposal or the adjournment proposal.

 

Record Date (Page 76)

 

Only shareholders of record at the close of business on January 2, 2024, the record date for the special general meeting (which we refer to as the “record date”), will be entitled to notice of, and to vote at, the special general meeting. As of January 2, 2024, the record date for the special general meeting, there were 45,071,920 ordinary shares issued.

 

Quorum (Page 76)

 

At the special general meeting, the presence of two or more persons representing in the aggregate, in person or by proxy, in excess of 50% of the total issued ordinary shares as of the record date throughout the meeting will form a quorum for the transaction of business. As a result, two or more persons representing (in person or by proxy) at least 22,535,961 of the issued ordinary shares as of the record date must be present throughout the meeting for a quorum to exist. If a quorum is not present, the special general meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Corporate Secretary of GAN may determine. If the special general meeting is adjourned, notice of the resumption of the meeting will be given to each GAN shareholder entitled to notice of, and to vote, at such meeting, unless the meeting is adjourned to a specific date, time and place announced at the meeting being adjourned.

 

 

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Required Vote (Page 77)

 

Assuming a quorum is present at the special general meeting, the approval of each of the three proposals at the special general meeting requires the affirmative vote of a simple majority of the votes cast by holders of ordinary shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with GAN’s bye-laws.

 

Share Ownership of Our Directors and Executive Officers (Page 77)

 

As of the record date, our directors and executive officers beneficially owned and were entitled to vote an aggregate of 341,384 ordinary shares (excluding any ordinary shares that would be issuable upon the vesting, exercise or settlement, as applicable, of options to acquire ordinary shares, restricted share units or restricted share awards), representing less than 1% of the issued ordinary shares.

 

Our directors and executive officers have informed us that they currently intend to vote all of their ordinary shares: (i) “FOR” the merger proposal; (ii) “FOR” the compensation advisory proposal; and (iii) “FOR” the adjournment proposal.

 

Voting (Page 77)

 

Holders of ordinary shares have one vote for each ordinary share held by them as of the record date and are entitled to vote all ordinary shares held by them as of the record date on all the proposals voted on at the special general meeting. If your ordinary shares are held in your name, then you will be able to vote under GAN’s voting system in accordance with the description under “Voting Procedures” below.

 

If your ordinary shares are held in “street name” through a bank, broker or other nominee, you should receive this proxy statement along with instructions for voting your shares from such broker, bank, or other nominee. You may submit your voting instructions by completing, signing and dating the voting instruction form enclosed with this proxy statement and returning it in the accompanying postage-paid envelope. Your broker, bank, or other nominee may also allow you to deliver your voting instructions over the Internet and may also permit you to vote by telephone. If you are a beneficial owner of shares held in street name and wish to vote in person at the special general meeting, you must obtain a legal proxy from the bank, broker or other nominee that holds those shares. A legal proxy is a written document that authorizes you to vote your shares held in street name. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy.

 

With respect to each of the proposals to be voted upon at the special general meeting, shareholders may vote “FOR” the proposal, “AGAINST” the proposal, or abstain from voting. An abstention is not considered a vote cast.

 

If you fail to submit a proxy or to vote in person at the special general meeting and you are a record holder, your shares will not be counted for purposes of quorum or as votes cast at the special general meeting. If your ordinary shares are held in “street name” and you do not provide your bank, broker or other nominee with any voting instructions, your shares will be treated as “broker non-votes” and will not be counted for purposes of quorum or voted at the special general meeting.

 

Voting Procedures (Page 77)

 

There are four ways to vote:

 

  Online. You may vote by proxy by visiting www.proxyvote.com and entering the control number located on the proxy card or voting instruction form enclosed with this proxy statement. If your ordinary shares are held in “street name” by your broker, bank, or other nominee, the availability of online voting will depend on the voting procedures of the organization that holds your shares.
     
  Phone. You may vote by proxy by calling the toll-free number found on the proxy card or voting instruction form enclosed with this proxy statement. If your ordinary shares are held in “street name” by your broker, bank, or other nominee, the availability of voting by phone will depend on the voting procedures of the organization that holds your shares.

 

 

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  Mail. You may vote by proxy by completing, signing and dating the proxy card or voting instruction form enclosed with this proxy statement and returning it in the postage-paid envelope provided with this proxy statement.
     
  At the Special General Meeting. If you are a shareholder of record, you may vote during the special general meeting. You will need the control number located on your proxy card to do so. Instructions on how to attend and participate, including how to demonstrate proof of share ownership, are available at www.virtualshareholdermeeting.com/GAN2024SM. If you are a beneficial owner of shares held in street name and wish to vote in person at the special general meeting, you must obtain a legal proxy from the bank, broker or other nominee that holds those shares. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy.

 

Shareholders who submit a proxy online or by telephone need not return a proxy card or voting instruction form.

 

All shares represented by valid proxies received prior to the taking of the vote at the special general meeting will be voted at the special general meeting. Where a shareholder provides voting instructions with respect to any matter to be acted upon, the shares will be voted in accordance with the shareholder’s instructions.

 

If you are a record holder and submit a valid proxy or voting instruction form but do not indicate your voting instructions on one or more of the proposals to be voted on at the special general meeting, your shares will be voted as recommended by the GAN board of directors on those proposals and as the designated proxyholders may determine in their discretion with respect to any other matters properly presented for a vote at the special general meeting.

 

The GAN board of directors unanimously recommends that you vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.

 

Abstentions and “Broker Non-Votes” (Page 78)

 

Abstentions will be counted toward the presence of a quorum at the special general meeting.

 

If your ordinary shares are held in “street name” through a bank, broker or other nominee, and you do not provide voting instructions to such bank, broker or other nominee, such bank, broker or other nominee can vote the ordinary shares with respect to “discretionary” proposals, but cannot vote such shares with respect to “non-discretionary” proposals. It is expected that all proposals to be voted on at the special general meeting will be considered “non-discretionary” proposals. Accordingly, if you do not provide voting instructions to the bank, broker or other nominee holding your shares, it is expected that such bank, broker or other nominee will not be able to vote such shares on your behalf, resulting in a “broker non-vote.” “Broker non-votes” will not be counted toward the presence of a quorum at the special general meeting (unless instructions have been provided by the applicable beneficial owner to the bank, broker or other nominee, as applicable, with respect to at least one proposal to be voted upon at the special general meeting).

 

Abstentions and “broker non-votes” will not be considered votes cast on any proposal brought before the special general meeting. Because approval of the proposals to be voted on at the special general meeting requires the affirmative vote of a simple majority of votes cast by holders of ordinary shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with GAN’s bye-laws, assuming a quorum is present, an abstention or a “broker non-vote” with respect to any proposal to be voted on at the special general meeting will not have the effect of a vote for or against such proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders who casted votes on such proposal.

 

Revocation of Proxies (Page 78)

 

You may revoke a submitted proxy prior to its exercise at the special general meeting in any of the following ways: (1) submitting a later-dated proxy by telephone or through the Internet prior to the telephone or Internet voting deadline indicated on your proxy card; (2) submitting a later-dated and signed proxy card to GAN’s Corporate Secretary; (3) attending the special general meeting and voting in person (attending the meeting will not, in and of itself, revoke your proxy); or (4) submitting a written revocation of your proxy to GAN’s Corporate Secretary. Any later-dated and signed proxy card or written notice of revocation must be delivered prior to the special general meeting to GAN’s Corporate Secretary at 400 Spectrum Center Drive, Suite 1900, Irvine, CA 92618.

 

If your ordinary shares are held in “street name” by your bank, broker or other nominee, please follow the instructions provided by your bank, broker or other nominee as to how to revoke or change your previously provided voting instructions.

 

 

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Expenses of Proxy Solicitation (Page 79)

 

The GAN board of directors is soliciting your proxy, and GAN will bear the cost of such proxy solicitation. GAN engaged Morrow Sodali LLC (which we refer to as “Morrow Sodali”) to solicit proxies for the special general meeting. Morrow Sodali will also provide consulting and proxy solicitation services in connection with the special general meeting. GAN will pay Morrow Sodali a fee of approximately $17,500, plus reasonable out-of-pocket disbursements for its services, and GAN will indemnify Morrow Sodali for certain losses arising out of its proxy solicitation services. In addition to the solicitation of proxies by mail, proxies may be solicited by GAN directors, officers and employees, or representatives of Morrow Sodali, in person or by telephone, email, or other means of communication, and GAN may pay persons holding ordinary shares on behalf of others their expenses for sending proxy materials to their principals. No additional compensation will be paid to GAN directors, officers or employees for their services in connection with any such solicitation of proxies.

 

Certain Effects of the Merger on GAN (Page 22)

 

Upon the terms and subject to the conditions of the merger agreement and the statutory merger agreement, at the effective time, Merger Sub will be merged with and into GAN, the separate corporate existence of Merger Sub will cease and GAN will continue as the surviving company in the merger and a wholly-owned subsidiary of SSC. As a result of the merger, GAN will cease to be a publicly traded company and the ordinary shares will be delisted from The Nasdaq Capital Market and deregistered under the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”). If the merger is completed, you will not own any ordinary shares of the surviving company and instead will only be entitled to receive the merger consideration described in the section of this proxy statement titled “The Merger – Merger Consideration” beginning on page 22 (unless you have properly demanded appraisal for your shares in accordance with, and have complied in all respects with, the Bermuda Companies Act, in which case you will be entitled only to those rights granted under the Bermuda Companies Act as described in the sections of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal for GAN Shareholders” beginning on page 50, “The Merger Agreement — Dissenting Shares” beginning on page 59 and “Appraisal Rights” beginning on page 74).

 

Effect on GAN if the Merger is Not Completed (Page 22)

 

If the merger proposal is not approved by GAN shareholders or if the merger is not completed for any other reason, you will not receive the merger consideration, GAN will remain a public company, the ordinary shares will continue to be listed and traded on The Nasdaq Capital Market and registered under the Exchange Act, and GAN will continue to be obligated to file periodic reports with the SEC. Upon termination of the merger agreement, GAN may be required, under certain circumstances, to pay a termination fee of $6.0 million to SSC, as described in the section of this proxy statement titled “The Merger Agreement — Expenses and Termination Fee” beginning on page 64.

 

Background of the Merger (Page 23)

 

A description of the actions that led to the execution of the merger agreement is included under the section of this proxy statement titled “The Merger — Background of the Merger.

 

Recommendation of the GAN Board of Directors (Page 28)

 

The GAN board of directors, based on the unanimous recommendation of its special committee comprised solely of independent directors (which we refer to as the “special committee”), unanimously recommends that GAN shareholders vote “FOR” the merger proposal, “FOR” the compensation advisory proposal and “FOR” the adjournment proposal. See the section of this proxy statement titled “The Merger — GAN’s Reasons for the Merger and Recommendation of the GAN Board of Directors” beginning on page 28 for the factors considered by the GAN board of directors in reaching its determination that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, GAN and its shareholders.

 

Opinion of GAN’s Financial Advisor (Page 33)

 

The GAN board of directors retained B. Riley Securities, Inc. (which we refer to as “B. Riley”) to provide it or, if requested by the GAN board of directors, the special committee, with financial advisory services in connection with the merger. The GAN board of directors selected B. Riley to act as its financial advisor based on B. Riley’s qualifications, expertise and reputation, and its knowledge of GAN’s business and affairs. On November 7, 2023, B. Riley rendered its oral opinion, which was subsequently confirmed in writing, to the special committee to the effect that, as of the date of such opinion and based upon and subject to the qualifications, limitations and assumptions considered in connection with the preparation of its opinion, including those stated in B. Riley’s written opinion letter, the per share cash merger consideration of $1.97 to be received by the holders of ordinary shares pursuant to the merger agreement and the statutory merger agreement was fair, from a financial point of view, to such shareholders.

 

 

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B. Riley’s opinion was directed to the special committee (in its capacity as such) and only addressed the fairness, from a financial point of view, to the holders of ordinary shares of the per share consideration to be received by such holders in the merger pursuant to the merger agreement and the statutory merger agreement and did not address any other aspect or implication of the merger, the merger agreement, the statutory merger agreement or any other agreement or understanding entered into in connection with the merger or otherwise. The summary of B. Riley’s opinion in this proxy statement is qualified in its entirety by reference to the full text of B. Riley’s written opinion, which is included as Annex B to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by B. Riley in preparing its opinion. However, neither B. Riley’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement is intended to be, and they do not constitute, a recommendation to the special committee, the GAN board of directors, GAN, any security holder of GAN or any other person as to how to act or vote on any matter relating to the merger or otherwise.

 

No Financing Condition (Page 41)

 

Completion of the merger is not subject to any financing condition. The total amount of funds required to complete the merger and related transactions and pay related fees and expenses is estimated to be approximately $107.6 million. SSC expects that it will be able to fund all payments required of it to complete the merger and related transactions entirely from its cash on hand.

 

Interests of Certain Persons in the Merger (Page 42)

 

In considering the recommendations of the GAN board of directors, you should be aware that certain of GAN’s directors and executive officers may have interests in the merger that may be different from or in addition to those of GAN shareholders generally. The GAN board of directors and the special committee were aware of and considered these interests, among other matters, in evaluating the merger agreement, in approving the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, and in recommending that GAN shareholders approve the merger proposal. As described in more detail in the section of this proxy statement titled “The Merger — Interests of GAN’s Directors and Executive Officers in the Merger,” these interests potentially include:

 

  the accelerated vesting (upon the effective time of the merger and assuming for this purpose that the effective time of the merger was on December 31, 2023) of (i) stock option awards covering 331,494 ordinary shares with an aggregate estimated value equal to $649,728, and (ii) restricted share unit awards covering 906,943 ordinary shares with an aggregate estimated value equal to $1,786,678, in each case, based on the per share merger consideration of $1.97 per ordinary share and, with respect to stock option awards, including only those stock option awards with a per share exercise price of less than $1.97;
     
  the payment of certain severance payments and benefits that the executive officers of GAN may become entitled to receive under their respective employment agreements if they experience a qualifying termination of employment following the effective time of the merger (assuming for this purpose that the merger was completed on December 31, 2023), with an aggregate estimated value of  $8,192,538;
     
  the payment of transaction bonuses that the executive officers of GAN will become entitled to receive under their respective employment agreements upon a change in control of GAN, which the merger will represent, with an aggregate estimated value of $1,685,972;
     
  that GAN’s executive officers may enter into arrangements with SSC prior to or following the closing;
     
  that GAN’s executive officers may receive restricted stock awards in 2024 that would entitle them to receive the merger consideration of $1.97 per ordinary share subject to such restricted stock awards;
     
  that GAN’s executive officers as of the effective time of the merger are expected to become the initial executive officers of the surviving company in the merger; and
     
  certain indemnification arrangements for GAN’s officers and directors and the continuation of certain insurance arrangements for such persons for six years after the completion of the merger.

 

The Merger Agreement (Page 51)

 

Treatment of Ordinary Shares (Page 28)

 

At the effective time, as a result of the merger (and without any action on the part of SSC, Merger Sub, GAN or any holder of ordinary shares) each ordinary share issued immediately prior to the effective time (other than any issued ordinary share that is owned by SSC, Merger Sub, or any direct or indirect wholly-owned subsidiary of SSC, Merger Sub or GAN, or owned by GAN as a treasury share) will no longer be issued and will automatically be canceled and converted into the right to receive the merger consideration of $1.97 per ordinary share in cash, without interest and subject to any applicable tax withholding.

 

 

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Treatment of GAN Equity Awards (Page 59)

 

At the effective time, as a result of the merger (and without any action on the part of SSC, Merger Sub, GAN or any holder of any outstanding option, restricted share unit, or restricted share award, as applicable):

 

  each then outstanding option to acquire ordinary shares (whether vested or unvested) will become fully vested and will be automatically canceled in exchange for the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to (a) the product of (i) the excess, if any, of $1.97 over the per share exercise price of the option and (ii) the number of ordinary shares issuable upon the exercise in full of such option, less (b) any applicable tax withholding; any such option with an exercise price per share equal to or greater than $1.97 will be canceled and terminated for no consideration as of immediately prior to the effective time;
     
  each then outstanding restricted share unit (whether vested or unvested) will become fully vested and will be automatically canceled in exchange for the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to (a) the product of (i) $1.97 and (ii) the number of ordinary shares subject to such restricted share unit, less (b) any applicable tax withholding; and
     
  each then outstanding restricted share award (whether vested or unvested) will become fully vested and non-forfeitable and will be converted into the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to $1.97 per share subject to such restricted share award.

 

No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements (Page 55)

 

In the merger agreement, GAN agreed to cease any solicitation, encouragement, discussions or negotiations with any persons (other than SSC and Merger Sub and their respective representatives) that may be ongoing with respect to a “takeover proposal” (as described and summarized on page 55 of this proxy statement) and to cease providing any further information with respect to GAN and its subsidiaries or in connection with any takeover proposal to any third party.

 

In the merger agreement, GAN also agreed not to: (a) solicit, initiate, encourage, facilitate or assist any inquiries, discussions or requests regarding, or the making, submission or announcement of, any proposal or offer that constitutes, or could reasonably be expected to lead to, a takeover proposal; (b) engage in, maintain or otherwise participate in any solicitations, discussions or negotiations regarding, or furnish to any third party or its representatives any information in connection with or with the intent to induce or for the purpose of soliciting, initiating, encouraging or facilitating, a takeover proposal (excluding a response to an unsolicited inquiry that refers the inquiring person to the terms of GAN’s covenants in the merger agreement with respect to the non-solicitation of takeover proposals, or upon receipt of a bona fide, unsolicited written takeover proposal that did not result from a breach of GAN’s covenants in the merger agreement with respect to the non-solicitation of takeover proposals, solely to the extent necessary to ascertain facts or clarify terms with respect to the takeover proposal in accordance with the merger agreement); or (c) approve, adopt, publicly recommend or enter into any letter of intent or similar agreement or commitment related to a takeover proposal (whether written or oral), or publicly propose to do the same.

 

If, at any time after November 7, 2023 and before shareholder approval of the merger proposal is obtained, GAN receives a bona fide, unsolicited written takeover proposal from a third party that did not result from a breach of GAN’s covenants in the merger agreement with respect to the non-solicitation of takeover proposals, and if the GAN board of directors and/or the special committee determines, in good faith, after consultation with its outside financial advisor and outside legal counsel, that such takeover proposal constitutes or could reasonably be expected to result in a “superior proposal” (as described and summarized on page 55 of this proxy statement), then GAN may, subject to certain conditions, furnish information to the third party who made such takeover proposal and participate in discussions with such third party regarding such takeover proposal.

 

The GAN board of directors is required to recommend that GAN shareholders approve the merger proposal at the special general meeting and may not change such recommendation, except in certain circumstances described below.

 

 

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Before the time that shareholder approval of the merger proposal is obtained, the GAN board of directors may make an “adverse recommendation change” (as described and summarized on page 55 of this proxy statement) in response to either an “intervening event” (as described and summarized on page 57 of this proxy statement) or a bona fide, unsolicited takeover proposal that did not result from a breach of GAN’s covenants in the merger agreement with respect to the non-solicitation of takeover proposals, but only, in each case, in compliance with the procedures of the merger agreement, including that the GAN board of directors and/or the special committee determines, in good faith, after consultation with its outside financial advisor and outside legal counsel, that the failure to make such adverse recommendation change would be inconsistent with the fiduciary duties of the GAN board of directors under applicable law. In such case, and if the merger agreement is terminated, GAN would be required to pay a $6.0 million termination fee to SSC.

 

Before the time that shareholder approval of the merger proposal is obtained, GAN may waive any standstill provisions to the extent necessary to permit a third party to make, on a confidential basis to the GAN board of directors and/or the special committee, a takeover proposal, so long as (a) such third party agrees to the disclosure of such takeover proposal to SSC and (b) the GAN board of directors and/or the special committee determines in good faith that the failure to take such action would reasonably be expected to result in a breach by the GAN board of directors of its fiduciary duties under applicable law.

 

See the section of this proxy statement titled “The Merger Agreement — No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreement” beginning on page 55.

 

Conditions to the Merger (Page 52)

 

The obligations of SSC, Merger Sub and GAN to consummate the merger are subject to the satisfaction or, to the extent permitted by applicable law, waiver at or prior to the closing of each of the following conditions:

 

  the merger proposal having been approved by GAN shareholders;
     
  the absence of any law, order, judgment, injunction, or ruling that makes the merger illegal or that prohibits the consummation of the merger;
     
  with respect to the obligations of SSC and Merger Sub to consummate the merger, on the one hand, and the obligation of GAN to consummate the merger, on the other hand, the other party having performed in all material respects all of its obligations required to be performed under the merger agreement at or prior to the closing, the other party’s representations and warranties in the merger agreement, subject to applicable materiality qualifiers, being true and correct when made and at and as of the closing, and the party having received an officer certificate on behalf of the other party certifying as to the satisfaction of specified conditions to closing;
     
  with respect to the obligations of SSC and Merger Sub to consummate the merger, the absence of a material adverse effect on GAN; and
     
  with respect to the obligations of SSC and Merger Sub to consummate the merger, not more than nine percent of the ordinary shares constituting dissenting shares, any waiting period (and any extension thereof) applicable to the merger under antitrust laws having been terminated or expired, the consents or approvals of governmental authorities and of gaming authorities having been obtained, and the National Congress of Chile not having enacted any applicable law or issued any order that makes GAN’s operation of online gaming illegal in Chile.

 

See the section of this proxy statement titled “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 52 for more information on the conditions to the parties’ respective obligations to consummate the merger.

 

 

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Termination of the Merger Agreement (Page 62)

 

The merger agreement may be terminated at any time before the effective time by mutual written consent of GAN and SSC and, subject to certain limitations described in the merger agreement, by either GAN or SSC if any of the following occurs:

 

  if GAN shareholders vote on the merger proposal at the special general meeting and do not approve the merger proposal;
     
  if (i) any governmental authority issues an order or takes any other action prohibiting the merger and such order or other action becomes final and non-appealable or (ii) any law prohibits the merger; or
     
  if the effective time does not occur on or before (i) November 7, 2024 or (ii) February 7, 2025 (which date the parties may agree to extend), if, on November 7, 2024, one or more of the regulatory approvals required under the merger agreement has not been obtained but all of the other conditions to closing have been satisfied or are capable of being satisfied (we refer to November 7, 2024 and February 7, 2025 (or such later date on which the parties agree), as the case may be, as the “end date”).

 

SSC may terminate the merger agreement:

 

  if any of the required regulatory approvals (other than delivering the statutory merger agreement and the filing of the merger application pursuant to the Bermuda Companies Act) (i) imposes any burdensome condition, (ii) are not in full force and effect or (iii) cannot be obtained, as ultimately determined by a final, non-appealable order or other determination of a governmental authority;
     
  if (i) the GAN board of directors effects an adverse recommendation change, (ii) GAN enters into any agreement related to a takeover proposal or (iii) GAN materially breaches its covenants with respect to the non-solicitation of takeover proposals; or
     
  at any time prior to the effective time (whether before or after GAN shareholders approve the merger proposal), if there has been a breach or failure to perform by GAN of its representations, warranties, covenants or other agreements in the merger agreement, or if any representation or warranty of GAN becomes untrue, in each case, such that certain conditions to closing are not reasonably capable of being satisfied, and either such breach or failure to perform is not capable of cure on or before the end date or 30 days have elapsed since the date of delivery of a written notice from SSC to GAN and such breach or failure to perform is not cured in all material respects.

 

GAN may terminate the merger agreement:

 

  at any time prior to the effective time (whether before or after GAN shareholders approve the merger proposal), if (i) there has been a breach by SSC or Merger Sub of their representations, warranties, covenants or other agreements contained in the merger agreement or (ii) if any representation or warranty of SSC and Merger Sub becomes untrue, in each case, such that certain conditions to closing are not reasonably capable of being satisfied, and either such breach or failure to perform is not capable of cure on or before the end date or 30 days have elapsed since the date of delivery of a written notice from GAN to SSC and such breach or failure to perform is not cured in all material respects; or
     
  before GAN shareholders approve the merger proposal in order to substantially concurrently with such termination enter into an agreement related to a takeover proposal (whether written or oral) or other definitive agreement relating to a superior proposal in accordance with the terms of the merger agreement.

 

Subject to the procedures set forth in the merger agreement, if GAN receives a superior proposal and GAN shareholders have not yet approved the merger proposal, GAN may terminate the merger agreement to enter into an agreement in respect of such superior proposal if the GAN board of directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to take such action would be inconsistent with its fiduciary duties under applicable law.

 

See the section of this proxy statement titled “The Merger Agreement — Termination of the Merger Agreement” for more information on the respective termination rights of the parties under the merger agreement.

 

Expenses and Termination Fee (Page 64)

 

Generally, all fees and expenses incurred in connection with the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement will be paid by the party incurring or required to incur such fees and expenses, whether or not the merger is consummated.

 

 

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Upon termination of the merger agreement, GAN may be required, under certain circumstances, to pay a termination fee of $6.0 million to SSC, and vice versa. See the section of this proxy statement titled “The Merger Agreement — Expenses and Termination Fees” for more information on the expenses and termination fee under the merger agreement.

 

Market Price of GAN Ordinary Shares (Page 11)

 

The closing price of the ordinary shares on The Nasdaq Capital Market on November 7, 2023, the last full trading day prior to the announcement of the merger agreement, was $0.89 per ordinary share. On January 3, 2024, the most recent practicable date before this proxy statement was first mailed to GAN shareholders, the closing price of the ordinary shares on The Nasdaq Capital Market was $1.57 per ordinary share. You are encouraged to obtain current market quotations for the ordinary shares prior to voting your ordinary shares.

 

Dissenting Shares (Page 59)

 

Under Bermuda law, GAN shareholders of record who do not vote in favor of the merger proposal and who are not satisfied that they have been offered fair value for their shares have the right to apply to the Supreme Court of Bermuda pursuant to Section 106(6) of the Bermuda Companies Act to have the fair value of their shares appraised. GAN shareholders intending to exercise such appraisal rights must file their application for appraisal of the fair value of their shares with the Supreme Court of Bermuda within one month of the giving of the notice convening the special general meeting. For the avoidance of doubt, this proxy statement constitutes such notice.

 

A failure of a dissenting shareholder to affirmatively vote against the merger proposal will not constitute a waiver of its rights to have the fair value of its ordinary shares appraised, provided that such shareholder did not vote in favor of the merger proposal.

 

See the sections of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal for GAN Shareholders” beginning on page 50, “The Merger Agreement — Dissenting Shares” beginning on page 59 and “Appraisal Rights” beginning on page 74 for a more detailed description of the appraisal rights available to GAN shareholders.

 

Delisting and Deregistration of GAN Shares (Page 50)

 

If the merger is completed, the ordinary shares will be delisted from The Nasdaq Capital Market and deregistered under the Exchange Act, and GAN will no longer be required to file periodic reports with the SEC on account of the ordinary shares.

 

Material U.S. Federal Income Tax Consequences (Page 83)

 

The exchange of ordinary shares for the merger consideration pursuant to the merger agreement generally will be a taxable transaction to U.S. holders of ordinary shares for U.S. federal income tax purposes. On an exchange of ordinary shares for the merger consideration in the merger, U.S. holders will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by them in the merger and their adjusted tax basis in their ordinary shares.

 

TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO HOLDERS OF ORDINARY SHARES WILL DEPEND UPON THE FACTS OF THEIR RESPECTIVE SITUATIONS. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, WE STRONGLY URGE GAN SHAREHOLDERS TO CONSULT WITH THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS.

 

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL GENERAL MEETING

 

The following questions and answers are intended to briefly address some commonly asked questions regarding the merger, the merger agreement, the statutory merger agreement and the special general meeting. These questions and answers may not address all questions that may be important to you. For more information, please see the section of this proxy statement titled “Summary” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents incorporated by reference into this proxy statement.

 

Q: Why am I receiving this proxy statement?
   
A: GAN, SSC and Merger Sub, a wholly-owned subsidiary of SSC, entered into the merger agreement, pursuant to which Merger Sub will be merged with and into GAN, the separate corporate existence of Merger Sub will cease and GAN will continue as the surviving company in the merger and a wholly-owned subsidiary of SSC.
   
  To consummate the merger, GAN shareholders must approve the merger proposal. The special general meeting is being held to seek such approval and to consider certain other related matters which are not prerequisites to the consummation of the merger. This proxy statement contains important information about the merger and related transactions and other matters being considered at the special general meeting.
   
Q: When and where is the special general meeting?
   
A: The special general meeting will take place at 10:00 a.m. (Pacific Time), on February 13, 2024 in a virtual meeting format via the Internet at www.virtualshareholdermeeting.com/GAN2024SM originating from GAN’s headquarters located at 400 Spectrum Center Drive, Suite 1900, Irvine, CA 92618.
   
Q: What proposals will be presented at the special general meeting?
   
A: At the special general meeting, GAN shareholders will be asked to consider and vote on each of the following proposals:

 

  Proposal 1 (the merger proposal): to approve and adopt the merger agreement, the statutory merger agreement and the consummation of the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger;
     
  Proposal 2 (the compensation advisory proposal): to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to GAN’s named executive officers in connection with the merger, as described in this proxy statement; and
     
  Proposal 3 (the adjournment proposal): to approve the adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the special general meeting to approve the merger proposal.

 

Holders of ordinary shares issued as of the record date will be entitled to vote on each of the above proposals.

 

Q: Does the GAN board of directors recommend approval of the proposals?
   
A: The GAN board of directors, based on the unanimous recommendation of the special committee, unanimously (a) determined that the merger consideration constitutes fair value for each ordinary share in accordance with the Bermuda Companies Act, (b) determined that the terms of the merger agreement, the statutory merger agreement, the merger and the other agreements and transactions contemplated by the merger agreement and the statutory merger agreement are in the best interests of GAN and its shareholders, (c) approved and declared advisable GAN’s execution, delivery and performance of the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, (d) directed that the merger agreement and the statutory merger agreement be submitted to GAN shareholders for adoption and approval and (e) recommends that GAN shareholders vote in favor of adoption and approval of the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger.

 

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The GAN board of directors unanimously recommends that GAN shareholders vote “FOR” the merger proposal, “FOR” the compensation advisory proposal, and “FOR” the adjournment proposal.

 

See the section of this proxy statement titled “The Merger — GAN’s Reasons for the Merger and Recommendation of the GAN Board of Directors” beginning on page 28 for a more complete description of the recommendations of the GAN board of directors. In considering the recommendations of the GAN board of directors, you should be aware that certain of GAN’s executive officers and directors may have interests in the merger that are different from, or in addition to, those of GAN shareholders generally. See the section of this proxy statement titled “The Merger — Interests of GAN’s Directors and Executive Officers in the Merger” beginning on page 42.

 

Q: What will happen in the merger?
   
A: If the merger proposal is approved and all other conditions to the merger have been satisfied or (to the extent permitted by applicable law) waived, Merger Sub will be merged with and into GAN, the separate corporate existence of Merger Sub will cease and GAN will continue as the surviving company in the merger and a wholly-owned subsidiary of SSC. As a result of the merger, GAN will cease to be a publicly traded company and the ordinary shares will be delisted from The Nasdaq Capital Market and deregistered under the Exchange Act. If the merger is completed, you will not own any ordinary shares of the surviving company and instead will only be entitled to receive the merger consideration of $1.97 per ordinary share in cash, without interest and subject to any applicable tax withholding.
   
Q: What will GAN shareholders receive in the merger?
   
A: Pursuant to the terms of the merger agreement and the statutory merger agreement, each ordinary share issued immediately prior to the effective time (other than any issued ordinary share that is owned by SSC, Merger Sub, or any direct or indirect wholly-owned subsidiary of SSC, Merger Sub or GAN, or owned by GAN as a treasury share) will be automatically canceled and converted into the right to receive the merger consideration of $1.97 per ordinary share in cash, without interest and subject to any applicable tax withholding. Accordingly, if the merger is completed and you do not properly exercise appraisal rights, you will be entitled to receive the merger consideration for each ordinary share that you own. You will not be entitled to retain or receive shares in the surviving company.
   
Q: How does the merger consideration compare to the closing price of an ordinary share prior to announcement of the transaction?
   
A: The merger consideration represents a premium of over 120% to the closing price of an ordinary share on The Nasdaq Capital Market on November 7, 2023, the last full trading day prior to the public announcement that the parties entered into the merger agreement, which was $0.8918.
   
Q: Are shareholders able to exercise appraisal or dissenters’ rights?
   
A: Under Bermuda law, GAN shareholders of record who do not vote in favor of the merger proposal and who are not satisfied that they have been offered fair value for their shares have the right to apply to the Supreme Court of Bermuda pursuant to Section 106(6) of the Bermuda Companies Act to have the fair value of their shares appraised. GAN Shareholders who wish to exercise their appraisal rights must: (i) not vote affirmatively in favor of the merger proposal (either in person or by proxy) and (ii) apply to the Supreme Court of Bermuda to appraise the fair value of their ordinary shares within one month of the giving of the notice convening the special general meeting (and, for the avoidance of doubt, this proxy statement constitutes such notice). See the section of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal for GAN Shareholders” and “Appraisal Rights” for more information on appraisal rights.
   
Q: When do the parties expect to complete the merger?
   
A: The parties expect to complete the merger by the fourth quarter of 2024, although there can be no assurance that the parties will be able to do so. The closing is subject to approval of the merger proposal by GAN shareholders, customary closing conditions and certain regulatory approvals, including notification to, or approval from, various gaming authorities. See the section of this proxy statement titled “The Merger Agreement — Conditions to Completion of the Merger” for more information.

 

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Q: What happens if the merger is not completed?
   
A: If the merger proposal is not approved by GAN shareholders, or the merger is not completed for any other reason, the merger will not occur and GAN shareholders will not receive the merger consideration. GAN shareholders will continue to own their ordinary shares until they are sold or otherwise disposed by them. GAN will remain an independent public company, the ordinary shares will continue to be registered under the Exchange Act and traded on The Nasdaq Capital Market, and GAN will continue to be obligated to file periodic reports with the SEC. In addition, if the merger agreement is terminated, GAN may be required, under certain circumstances, to pay a termination fee of $6.0 million to SSC.
   
Q: Does SSC have the financial resources to complete the merger?
   
A: Yes. Completion of the merger is not subject to any financing condition. The total amount of funds required to complete the merger and related transactions and pay related fees and expenses are estimated to be approximately $107.6 million. SSC expects that it will be able to fund all payments required of it to complete the merger and related transactions entirely from its cash on hand.
   
Q: What are the U.S. federal income tax consequences of the merger to holders of ordinary shares?
   
A: The exchange of ordinary shares for the merger consideration pursuant to the merger agreement generally will be a taxable transaction to U.S. holders of ordinary shares for U.S. federal income tax purposes. On an exchange of ordinary shares for the merger consideration in the merger, U.S. holders will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by them in the merger and their adjusted tax basis in their ordinary shares.

 

HOLDERS SHOULD READ THE SECTION OF THIS PROXY STATEMENT TITLED “MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES” FOR A MORE DETAILED DISCUSSION OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO HOLDERS WILL DEPEND UPON THE FACTS OF THEIR RESPECTIVE SITUATIONS. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, GAN SHAREHOLDERS ARE STRONGLY URGED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS.

 

Q: Why are GAN shareholders being asked to cast an advisory (non-binding) vote to approve compensation that may be paid or become payable to GAN’s named executive officers in connection with the merger?
   
A: The SEC, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, adopted rules that require GAN to seek an advisory (non-binding) vote with respect to certain compensation that may be paid or become payable to GAN’s named executive officers in connection with the merger. The compensation advisory proposal satisfies this requirement. See the section of this proxy statement titled “The Merger — Interests of GAN’s Directors and Executive Officers in the Merger” for more details on such compensation.
   
Q: Do any of GAN’s directors or officers have interests in the merger that may differ from or be in addition to the interests of GAN shareholders?
   
A: In considering the recommendations of the GAN board of directors, you should be aware that certain of GAN’s directors and executive officers may have interests in the merger that may be different from or in addition to those of GAN shareholders generally. The GAN board of directors and the special committee were aware of and considered these interests, among other matters, in evaluating the merger agreement, in approving the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, and in recommending that GAN shareholders approve the merger proposal. As described in more detail in the section of this proxy statement titled “The Merger — Interests of GAN’s Directors and Executive Officers in the Merger,” these interests potentially include:

 

  the accelerated vesting (upon the effective time of the merger and assuming for this purpose that the effective time of the merger was on December 31, 2023) of (i) stock option awards covering 331,494 ordinary shares with an aggregate estimated value equal to $649,728, and (ii) restricted share unit awards covering 906,943 ordinary shares with an aggregate estimated value equal to $1,786,678, in each case, based on the per share merger consideration of $1.97 per ordinary share and, with respect to stock option awards, including only those stock option awards with a per share exercise price of less than $1.97;

 

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  the payment of certain severance payments and benefits that the executive officers of GAN may become entitled to receive under their respective employment agreements if they experience a qualifying termination of employment following the effective time of the merger (assuming for this purpose that the merger was completed on December 31, 2023), with an aggregate estimated value of  $8,192,538;
     
  the payment of transaction bonuses that the executive officers of GAN will become entitled to receive under their respective employment agreements upon a change in control of GAN, which the merger will represent, with an aggregate estimated value of $1,685,972;
     
  that GAN’s executive officers may enter into arrangements with SSC prior to or following the closing;
     
  that GAN’s executive officers may receive restricted stock awards in 2024 that would entitle them to receive the merger consideration of $1.97 per ordinary share subject to such restricted stock awards;
     
  that GAN’s executive officers as of the effective time of the merger are expected to become the initial executive officers of the surviving company in the merger; and
     
  certain indemnification arrangements for GAN’s officers and directors and the continuation of certain insurance arrangements for such persons for six years after the completion of the merger.

 

Q: I hold GAN equity awards. How will my GAN equity awards be treated in the merger?
   
A: At the effective time, as a result of the merger (and without any action on the part of SSC, Merger Sub, GAN or any holder of any outstanding option, restricted share unit, or restricted share award, as applicable):

 

  each then outstanding option to acquire ordinary shares (whether vested or unvested) will become fully vested and will be automatically canceled in exchange for the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to (a) the product of (i) the excess, if any, of $1.97 over the per share exercise price of the option and (ii) the number of ordinary shares issuable upon the exercise in full of such option, less (b) any applicable tax withholding; any option with an exercise price per share equal to or greater than $1.97 will be canceled and terminated for no consideration as of immediately prior to the effective time;
     
  each then outstanding restricted share unit (whether vested or unvested) will become fully vested and will be automatically canceled in exchange for the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to (a) the product of (i) $1.97 and (ii) the number of ordinary shares subject to such restricted share unit, less (b) any applicable tax withholding; and
     
  each then outstanding restricted share award (whether vested or unvested) will become fully vested and non-forfeitable and will be converted into the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to $1.97 per share subject to such restricted share award.

 

Q: What is the required quorum for the special general meeting?
   
A: At the special general meeting, the presence of two or more persons representing in the aggregate, in person or by proxy, in excess of 50% of the total issued ordinary shares as of the record date throughout the meeting will form a quorum for the transaction of business. As a result, two or more persons representing (in person or by proxy) at least 22,535,961 of the issued ordinary shares as of the record date must be present throughout the meeting for a quorum to exist.
   
Q: What shareholder vote is required to approve the proposals to be voted on at the special general meeting?
   
A: Assuming a quorum is present at the special general meeting, the approval of each of the three proposals at the special general meeting requires the affirmative vote of a simple majority of the votes cast by holders of ordinary shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with GAN’s bye-laws.
   
Q: What effect do abstentions and “broker non-votes” have on the proposals?
   
A: Abstentions will be counted toward the presence of a quorum at the special general meeting. “Broker non-votes” will not be counted toward the presence of a quorum at the special general meeting (unless instructions have been provided by the applicable beneficial owner to the bank, broker or other nominee, as applicable, with respect to at least one proposal to be voted upon at the special general meeting).

 

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  Abstentions and “broker non-votes” will not be considered votes cast on any proposal brought before the special general meeting. Because approval of the proposals to be voted on at the special general meeting requires the affirmative vote of a simple majority of votes cast by holders of ordinary shares present in person or represented by proxy and entitled to vote at the special general meeting in accordance with GAN’s bye-laws (assuming a quorum is present), an abstention or a “broker non-vote” with respect to any proposal to be voted on at the special general meeting will not have the effect of a vote for or against such proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders who casted votes on such proposal.
   
Q: Who is entitled to vote at the special general meeting and what is the record date?
   
A: Only GAN shareholders of record at the close of business on January 2, 2024, the record date for the special general meeting, will be entitled to notice of, and to vote at, the special general meeting. Holders of ordinary shares will be entitled to vote on the merger proposal, the compensation advisory proposal and the adjournment proposal. As of the record date, there were 45,071,920 ordinary shares issued and entitled to be voted at the special general meeting.
   
  If you hold your ordinary shares in “street name” beneficially through a bank, broker or other nominee, you must follow the procedures required by your bank, broker or other nominee. You should contact your bank, broker or other nominee, as applicable, for more information on these procedures.
   
Q: What do I need to do now?
   
A: We urge you to carefully read this proxy statement, including its annexes and the documents incorporated by reference in this proxy statement. You are also encouraged to consult with your accounting, legal and tax advisors. Once you have considered all relevant information, we encourage you to complete, sign, date and return the enclosed proxy card (if you are a shareholder of record) or voting instruction form you receive from your bank, broker or other nominee (if you are a shareholder who holds your shares in “street name” through a bank, broker or other nominee), or to follow the instructions provided to you for submitting your proxy via the Internet or by telephone.
   
Q: How do I vote my shares?
   
A: Shareholder of Record. If your ordinary shares are registered directly in your name, then you are considered a shareholder of record with respect to those shares and this proxy statement and the enclosed proxy card were sent to you directly by or on behalf of GAN. As a shareholder of record, you may vote by completing, dating, signing and mailing the enclosed proxy card in the return envelope provided as soon as possible, or by following the instructions on the proxy card to submit your proxy via the Internet at the website indicated or by telephone via the telephone number indicated. Submission of your proxy by telephone or over the Internet is available through 11:59 p.m. Eastern Time on the day immediately before the special general meeting. GAN shareholders of record may also vote during the special general meeting. You will need to access the special general meeting by entering the control number located on your proxy card where indicated at the special general meeting log in page. However, whether or not you plan to attend the special general meeting, we encourage you to vote your ordinary shares in advance by submitting your proxy to ensure that your vote is represented at the special general meeting.

 

Beneficial Owner of Shares Held in Street Name. If your ordinary shares are held in the name of a bank, broker or other nominee, then you are considered a beneficial owner of such shares held for you in what is known as “street name.” Most shareholders hold their shares in “street name.” If this is the case, this proxy statement has been forwarded to you by your bank, broker or other nominee together with a voting instruction form. You may vote by completing and returning your voting instruction form to your bank, broker or other nominee. Please review the voting instruction form to see if you may submit your voting instructions by telephone or over the Internet in lieu of signing and returning the voting instruction form. The bank, broker or other nominee holding your account is considered the shareholder of record for purposes of voting at the special general meeting. As a beneficial owner, you have the right to instruct the organization that holds your shares of record how to vote the ordinary shares you beneficially own.

 

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Q: If my ordinary shares are held in “street name,” how do I vote in person at the special general meeting?
   
A: If your ordinary shares are held in “street name” and you wish to vote in person at the special general meeting, you must obtain a legal proxy from the bank, broker or other nominee that holds those shares. A legal proxy is a written document that authorizes you to vote your shares held in street name. Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy.
   
Q: What do I do if I want to change my vote?
   
A: If you are a shareholder of record of GAN, you may revoke or change your proxy prior to its exercise at the special general meeting in any of the following ways:

 

  submitting a later-dated proxy by telephone or through the Internet prior to the telephone or Internet voting deadline indicated on your proxy card;
     
  submitting a later-dated and signed proxy card;
     
  attending the special general meeting and voting in person;
     
  submitting a written revocation of your proxy.

 

Note that attending the special general meeting will not automatically revoke your proxy unless you properly vote at the special general meeting. Any later-dated and signed proxy card or written notice of revocation must be delivered prior to the special general meeting to the attention of GAN’s Corporate Secretary at 400 Spectrum Center Drive, Suite 1900, Irvine, CA 92618.

 

If your ordinary shares are held in “street name,” please follow the instructions provided by your bank, broker or other nominee as to how to revoke or change your previously provided voting instructions.

 

Q: How will I receive payment when the merger occurs?
   
A: You will receive your cash payment in respect of your ordinary shares as promptly as practicable following the effective time and the paying agent’s receipt of the documents that it requests from you, if any.
   
Q: What is a proxy?
   
A: A proxy is your legal designation of another person, referred to as a “proxy,” to vote your ordinary shares. The written document describing the matters to be considered and voted on at the special general meeting is called a “proxy statement.” The document used to designate a proxy to vote your ordinary shares is called a “proxy card.” The GAN board of directors has designated Seamus McGill and Sylvia Tiscareño, each of them with full power of substitution, as proxies for the special general meeting.
   
Q: If a GAN shareholder submits a proxy, how are the shares voted?
   
A: Regardless of the method you choose to submit your proxy, the individuals named on the enclosed proxy card, your proxies, will vote your shares in the way you indicate. When completing the proxy card or submitting your proxy via telephone or Internet, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the proposals to be voted on at the special general meeting.

 

If you sign and properly return your proxy card or submit your proxy via telephone or Internet, but do not include instructions on how to vote on one or more proposals, your ordinary shares will be voted as recommended by the GAN board of directors with respect to each such proposal. Except for the proposals described in this proxy statement, no other proposals are currently anticipated to be presented for consideration at the special general meeting. If other proposals requiring a vote of GAN shareholders are properly brought before the special general meeting, the persons named in the enclosed proxy card, if properly authorized, will have discretion to vote the shares they represent in accordance with their best judgment.

 

Q: Who will solicit and pay the cost of soliciting proxies?
   
A: GAN engaged Morrow Sodali to assist in the solicitation of proxies for the special general meeting. GAN estimates that it will pay Morrow Sodali a fee of approximately $17,500 and reimbursement of certain disbursements.

 

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Q: Who will count the votes?
   
A: The votes will be counted by the independent inspector of election appointed for the special general meeting. Representatives of Broadridge Financial Solutions will count the votes and will serve as the independent inspector of election.
   
Q: Where can I find the voting results of the special general meeting?
   
A: GAN intends to announce preliminary voting results at the special general meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC following the special general meeting. All reports that GAN files with the SEC are publicly available when filed. See “Where You Can Find More Information”.
   
Q: Who should GAN shareholders contact with any additional questions?
   
A: If you have any additional questions about the merger or you would like additional copies of this proxy statement or assistance voting your shares, you should contact Morrow Sodali at:

 

Morrow Sodali LLC

333 Ludlow Street, 5th Floor, South Tower

Stamford, CT 06902

Toll-Free: (800) 662-5200

[email protected]

 

Q: Where can I find more information about GAN?
   
A: You can find more information about GAN in the documents described under the section of this proxy statement titled “Where You Can Find More Information.”

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

 

This proxy statement, and the documents incorporated by reference in this proxy statement, as well as information included in oral statements or other written statements made or to be made by us or on our behalf, may include “forward-looking statements” within the meaning of the U.S. securities laws, including Section 21E of the Exchange Act, that do not directly or exclusively relate to historical facts, including, without limitation, statements that reflect GAN’s current expectations and views as to future events and financial and operational performance, including, for example, expected completion and timing of the merger and other information relating to the merger, expected timing of government approvals or opening of new regulated markets for online gaming, financial guidance and expectations or operational targets, anticipated revenue growth or operating synergies, the results of GAN’s restructuring efforts, and expectations about GAN’s ability to effectively execute its business strategy and expansion goals. All statements other than statements of historical fact in this proxy statement, and the documents incorporated by reference in this proxy statement, as well as information included in oral statements or other written statements made or to be made by us or on our behalf, are forward-looking statements. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words.

 

You should be aware that forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies. Forward-looking statements are only predictions, and these statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot assure you that the actual results or developments we anticipate will be realized, or, even if realized, that they will have the expected effects on GAN’s business or operations. GAN’s actual results or performance could differ materially from the results or performance discussed or implied in the forward-looking statements contained or incorporated by reference in this proxy statement, or the oral statements or other written statements made or to be made by us or on our behalf. In addition to other factors and matters referred to or incorporated by reference in this proxy statement, or the oral statements or other written statements made or to be made by us or on our behalf, the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

 

  the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;
     
  the nature, cost and outcome of any litigation or other legal proceedings, including any such proceedings instituted against GAN and/or others relating to the merger agreement or the merger;
     
  the inability to complete the merger within the anticipated time period, or at all, because of the failure to receive, on a timely basis or otherwise, the required approvals from GAN shareholders or governmental or regulatory agencies in connection with the merger;
     
  the risk that a condition to the closing may not be satisfied;
     
  the failure of the merger to close for any other reason;
     
  the risk that the pendency of the merger disrupts current plans and operations or diverts management’s attention from our ongoing business and potential difficulties in employee retention and hiring due to the pendency of the merger;
     
  the effect of the announcement of the merger on our business relationships, operating results and business generally;
     
  the risk that GAN’s share price may decline significantly if the merger is not consummated;
     
  the risk that the merger agreement may be terminated in circumstances requiring GAN to pay a termination fee of $6.0 million;
     
  the amount of costs, fees and expenses related to the merger, or unexpected costs, fees or liabilities related to the merger;

 

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  other risks to consummation of the merger, including the risk that the merger will not be consummated within the expected time period or at all;
     
  other factors that could affect the results of our business, such as labor shortages and increased turnover in our employee base, contractual, inflationary and other general cost increases, including with regard to costs of labor, laws and regulations governing the gaming industry, governmental policies affecting gaming operations, disruptions to information technology systems, the inability to successfully execute our business strategy, and changes in the demand for our products and services; and
     
  other risks detailed in GAN’s filings with the SEC, including its annual report on Form 10-K for the year ended December 31, 2022 and its quarterly report on Form 10-Q for the quarterly period ended September 30, 2023. See the section of this proxy statement titled “Where You Can Find More Information.”

 

The foregoing review of important factors that could cause actual results to differ from expectations should not be construed as exhaustive and should be read in conjunction with information contained or incorporated by reference herein, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2022, our definitive proxy statement for our 2023 Annual Meeting of Shareholders filed with the SEC on April 28, 2023 and our recent quarterly reports on Form 10-Q and current reports on Form 8-K. See the section of this proxy statement titled “Where You Can Find More Information”. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements. Many of the factors that will determine our future results and financial condition are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained or incorporated herein, or the oral statements or other written statements made or to be made by us or on our behalf, you should not place undue reliance on any forward-looking statement. We cannot guarantee any future results, levels of activity, performance or achievements. The forward-looking statements contained or incorporated by reference in this proxy statement, or the oral statements or other written statements made or to be made by us or on our behalf, speak only as of the date on which the statements were made and GAN undertakes no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. GAN shareholders are advised, however, to consult any future disclosures we make on related subjects as may be detailed in our other filings made from time to time with the SEC.

 

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PARTIES TO THE MERGER

 

GAN Limited

400 Spectrum Center Drive, Suite 1900

Irvine, California 92618

(833) 565-0550

 

GAN is a Bermuda exempted company limited by shares incorporated in December 2019. Through its subsidiaries, GAN operates in two lines of business. GAN is a B2B supplier of enterprise SaaS solutions for online casino gaming, commonly referred to as iGaming, and online sports betting applications. Beginning with GAN’s January 2021 acquisition of Coolbet, GAN is also a B2C developer and operator of an online sports betting and casino platform, which offers consumers in select markets in Northern Europe, Latin America and Canada a digital portal for engaging in sports betting, online casino games and poker.

 

GAN’s ordinary shares are listed on The Nasdaq Capital Market under the symbol “GAN”.

 

For additional information on GAN and its business, including how to obtain the documents that GAN has filed with the SEC, see the section of this proxy statement titled “Where You Can Find More Information.”

 

SEGA SAMMY CREATION INC.

Sumitomo Fudosan Osaki Garden Tower

1 Chome-1-1 Nishishinagawa

Shinagawa City, Tokyo 141-0033 Japan

 

SSC is a Japanese corporation established in June 2013. SSC and its wholly-owned subsidiary Sega Sammy Creation USA Inc., develop, manufacture and distribute land-based and online/social casino gaming products and software. SSC is a subsidiary of SEGA SAMMY HOLDINGS. SEGA SAMMY HOLDINGS, a Japanese corporation, is the holding company of the SEGA SAMMY Group, a group of companies comprising the Entertainment Contents Business, which offers a diversity of fun through consumer and arcade game content, toys and animation; the Pachislot and Pachinko Machines Business, which conducts everything from development to sales of Pachinko/Pachislot machines; and the Resort Business, which develops and operates resort facilities in Japan and overseas. For the six months ended September 30, 2023 and the fiscal year ended March 31, 2023, SEGA SAMMY HOLDINGS reported Japanese GAAP2 ordinary income of ¥42.0 billion and ¥49.4 billion, respectively. SEGA SAMMY HOLDINGS reported total net assets of ¥356.6 billion and ¥331.3 billion as of September 30, 2023 and March 31, 2023, respectively. SEGA SAMMY HOLDINGS’ shares are listed on the Tokyo Stock Exchange under the ticker code 6460. SEGA SAMMY HOLDINGS’ American Depository Receipts are traded in the OTC market under the symbol “SGAMY.”

 

Arc Bermuda Limited

c/o SEGA SAMMY CREATION INC.

Sumitomo Fudosan Osaki Garden Tower

1 Chome-1-1 Nishishinagawa

Shinagawa City, Tokyo 141-0033 Japan

 

Arc Bermuda Limited is a Bermuda exempted company limited by shares and a wholly-owned subsidiary of SSC that was formed solely for purposes of entering into the merger agreement and the statutory merger agreement and, subject to the terms and conditions thereof, completing the transactions contemplated by the merger agreement and the statutory merger agreement. Upon completion of the merger, Merger Sub will be merged with and into GAN, the separate corporate existence of Merger Sub will cease and GAN will continue as the surviving company in the merger and a wholly-owned subsidiary of SSC.

 

 

2 SEGA SAMMY HOLDINGS’ financial statements are prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law of Japan and its related accounting regulations, and in conformity with Japanese GAAP.

 

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THE MERGER

 

This discussion of the merger is qualified in its entirety by reference to the merger agreement, as amended, and the statutory merger agreement, copies of which are incorporated by reference in their entirety and included in this proxy statement as Annex A (the merger agreement), Annex A-1 (the statutory merger agreement), and Annex A-2 (amendment to the merger agreement). You should read the merger agreement and the statutory merger agreement in their entirety because they, and not this proxy statement, are the legal documents that govern the merger.

 

Certain Effects of the Merger on GAN

 

Upon the terms and subject to the conditions of the merger agreement and the statutory merger agreement, at the effective time, Merger Sub will merge with and into GAN, with GAN continuing as the surviving company of the merger. GAN, as the surviving company in the merger, will continue in existence as a Bermuda exempted company limited by shares and a wholly-owned subsidiary of SSC. As a result of the merger under Bermuda law, from and after the effective time, GAN’s and Merger Sub’s respective undertakings, properties and liabilities will become vested in GAN as the surviving company in the merger.

 

At the effective time, each ordinary share issued immediately prior to the effective time (other than any issued ordinary share that is owned by SSC, Merger Sub, or any direct or indirect wholly-owned subsidiary of SSC, Merger Sub or GAN, or owned by GAN as treasury shares) will be automatically canceled and converted into the right to receive the merger consideration.

 

GAN will cooperate with SSC to delist the ordinary shares from The Nasdaq Capital Market and to deregister the ordinary shares under the Exchange Act as soon as reasonably practicable following the effective time, and at such time, GAN will cease to be a publicly traded company and will no longer be obligated to file periodic reports with the SEC. If the merger is completed, you will not own any ordinary shares of the surviving company and instead will only be entitled to receive the merger consideration described in the section of this proxy statement titled “- Merger Consideration” or, with respect to dissenting shares, will be entitled only to those rights granted under the Bermuda Companies Act as described in the sections of this proxy statement titled “The Merger — Dissenters’ Rights of Appraisal for GAN Shareholders” beginning on page 50, “The Merger Agreement — Dissenting Shares” beginning on page 59 and “Appraisal Rights” beginning on page 74.

 

Effect on GAN if the Merger is Not Completed

 

If the merger proposal is not approved by GAN shareholders or if the merger is not completed for any other reason, you will not receive the merger consideration, GAN will remain a public company, the ordinary shares will continue to be listed and traded on The Nasdaq Capital Market and registered under the Exchange Act, and GAN will continue to be obligated to file periodic reports with the SEC.

 

Furthermore, depending on the circumstances that would have caused the merger not to be completed, it is possible that the price of the ordinary shares will decline significantly. If that were to occur, it is uncertain when, if ever, the price of the ordinary shares would return to the price at which it trades as of the date of this proxy statement.

 

Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your ordinary shares. If the merger is not completed, the GAN board of directors will continue to evaluate and review our business operations and capitalization, among other things, and make such changes as are deemed appropriate and continue to seek to enhance shareholder value. There can be no assurance that any other transaction acceptable to the GAN board of directors will be offered or that our business, financial condition or results of operations will not be adversely impacted.

 

In addition, upon termination of the merger agreement, GAN may be required, under certain circumstances, to pay a termination fee of $6.0 million to SSC, as described in the section of this proxy statement titled “The Merger Agreement — Expenses and Termination Fees” beginning on page 64.

 

Merger Consideration

 

At the effective time, each ordinary share issued immediately prior to the effective time (other than any issued ordinary share that is owned by SSC, Merger Sub, or any direct or indirect wholly-owned subsidiary of SSC, Merger Sub or GAN, or owned by GAN as a treasury share) will be automatically canceled and converted into the right to receive the merger consideration. All ordinary shares converted into the right to receive the merger consideration will no longer be issued and will be automatically canceled and cease to exist as of the effective time, and will thereafter represent only the right to receive the merger consideration.

 

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After the completion of the merger, under the terms of the merger agreement and the statutory merger agreement, you will have the right to receive the merger consideration, but you will no longer have any rights as a GAN shareholder (except that GAN shareholders who have properly demanded appraisal for the fair value of their shares in accordance with, and have complied in all respects with, the Bermuda Companies Act will be entitled only to those rights granted under the Bermuda Companies Act as described in the sections of this proxy statement titled “— Dissenters’ Rights of Appraisal for GAN Shareholders” beginning on page 50, “The Merger Agreement — Dissenting Shares” beginning on page 59 and “Appraisal Rights” beginning on page 74).

 

Background of the Merger

 

The GAN board of directors, with input from GAN management, regularly reviews and assesses opportunities to increase shareholder value as part of its ongoing evaluation of GAN’s business. Since 2020, the GAN board of directors engaged financial advisors on multiple occasions to approach, on behalf of GAN, key industry participants concerning the possible acquisition of GAN, business combinations with GAN or acquisitions of all or part of GAN’s business.

 

In January 2021, the GAN board of directors engaged an investment bank (Bank 1) to evaluate the potential sale of all or a material part of GAN’s business. Bank 1, with the assistance of GAN management, developed a presentation and established a virtual data room with finance, operating and regulatory materials relating to GAN’s business. With the GAN board of directors’ approval, Bank 1 initiated contact with 14 strategic industry participants in the U.S., Europe and Asia. That process was unsuccessful . None of the parties contacted submitted a letter of intent or other indication of interest and the process was terminated in January 2022.

 

On July 29, 2022, the GAN board of directors engaged another investment bank (Bank 2) to evaluate the sale of GAN’s B2C sports betting business, primarily targeted at European sports betting companies. Bank 2 prepared a confidential presentation for GAN’s B2C sports betting business and the virtual data room was updated to include more recent finance, operating and regulatory materials relating to GAN’s business. In connection with this process, Bank 2 contacted 10 strategic industry participants in the sports betting business (none of which had been contacted by Bank 1), three of which entered confidential due diligence and three submitted preliminary non-binding indications of interest as discussed below.

 

On September 30, 2022, GAN received a preliminary non-binding indication of interest from a publicly-traded holding company with major online sports betting and online casino gaming brands (Bidder A) to acquire GAN’s B2C sports betting business for a valuation equal to 6.0 to 8.0 times pro-forma earnings before interest, taxes, depreciation, and amortization (which we refer to as “EBITDA”), subject to its due diligence. Bidder A expressed concerns over potential changes in the tax regime in Chile for gaming and negotiations terminated without Bidder A submitting a letter of intent.

 

On January 13, 2023, GAN received a preliminary non-binding indication of interest from a vertically integrated online iGaming operator (Bidder B) to acquire GAN’s B2C sports betting business for a purchase price of $98 million on a cash-free, debt-free basis. The indication of interest provided that $35 million of the purchase price would be paid at closing, with the remaining $63 million payable upon achievement of performance-based milestone targets. The GAN board of directors determined this offer was inadequate and rejected it.

 

On January 19, 2023, GAN received a preliminary non-binding indication of interest from a European-based online gambling company offering online sports betting and online casino gaming through a variety of brands (Bidder C). The indication of interest valued GAN’s B2C sports betting business at $30 million, payable in cash in two installments. The GAN board of directors determined this offer was inadequate and rejected it.

 

In January 2023, GAN began to actively evaluate alternatives to refinance its $30 million term loan with Beach Point Capital Management LP (which we refer to as “Beach Point” and which term loan we refer to as the “$30 million term loan”). GAN was at risk of breaching the financial covenants for the $30 million term loan, which could have resulted in the acceleration of its repayment obligation. The GAN board of directors and management evaluated a range of alternatives to avoid the potential breach, including seeking amendments to the financial covenants or waivers from Beach Point, refinancing the debt with an alternative financial partner, raising capital through an equity offering to repay the debt, and obtaining strategic financing from one or more industry partners.

 

On March 14, 2023, representatives of GAN’s management contacted B. Riley for assistance evaluating options for securing additional equity financing or re-financing the $30 million term loan. At the request of GAN’s special committee, representatives of B. Riley began discussions with several U.S.-based sports betting and casino operators, including Bidder D, Bidder E and Bidder F, each of which is described below.

 

On March 27, 2023, GAN and SEGA SAMMY HOLDINGS entered into a confidentiality agreement in connection with discussions regarding a possible financing transaction between GAN and SEGA SAMMY HOLDINGS (or an affiliate thereof) to restructure the $30 million term loan.

 

On March 28, 2023, the GAN board of directors formally engaged B. Riley as its financial advisor to assist GAN in exploring opportunities to refinance the $30 million term loan and to conduct a review of strategic alternatives available to GAN to maximize shareholder value.

 

On March 30, 2023, GAN issued its earnings release for its financial results for the fourth quarter and fiscal year ending December 31, 2022. The earnings release reported that GAN had initiated a process to assess a range of strategic alternatives to maximize shareholder value and had retained B. Riley as its financial advisor.

 

From late March through early April 2023, representatives of GAN and of its financial advisors and of Sheppard Mullin Richter & Hampton LLP (which we refer to as “Sheppard Mullin”), its legal advisor, engaged in discussions with representatives of SEGA SAMMY HOLDINGS, Bidder D, Bidder E and Bidder F, primarily focused on GAN obtaining a senior secured loan in an amount sufficient to refinance the $30 million term loan. Following initial discussions, Bidder E and Bidder F opted to explore providing a senior secured loan to refinance the $30 million term loan via a joint venture.

 

Following weeks of diligence and negotiations, Bidder D submitted a non-binding preliminary proposal to GAN that the GAN board of directors determined was not in the best interests of the GAN shareholders. Discussions with Bidder D terminated thereafter. Bidder E and Bidder F continued to perform due diligence and submitted a non-binding term sheet to GAN under which Bidder E and Bidder F would make a senior secured loan to GAN to refinance the $30 million term loan. Taken as a whole, the GAN board of directors determined that the proposal contemplated by such term sheet was not in the best interests of the GAN shareholders. However, in an effort to improve the terms from GAN’s perspective, the GAN board of directors and management continued to engage in discussions with Bidder E and Bidder F. In parallel with the ongoing discussions with Bidder E and Bidder F, GAN continued discussions with SEGA SAMMY HOLDINGS relating to a possible refinance of the $30 million term loan.

 

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On April 5, 2023, representatives of GAN’s management and of SEGA SAMMY HOLDINGS’ management met to discuss the terms of a possible financing transaction.

 

Also on April 5, 2023, representatives of B. Riley delivered to representatives of SMBC Nikko Securities, Inc., financial advisor to SEGA SAMMY HOLDINGS (“SMBC Nikko”), a request from GAN to SEGA SAMMY HOLDINGS to increase the term loan amount to $50 million.

 

On April 7, 2023, representatives of SEGA SAMMY HOLDINGS sent to representatives of GAN’s management a non-binding term sheet outlining proposed terms for a possible financing transaction, which included an initial draft of an exclusivity agreement pursuant to which GAN would agree to exclusively negotiate with SEGA SAMMY HOLDINGS for a strategic transaction involving the sale of significant equity or assets of GAN.

 

On April 8, 2023, representatives of Sheppard Mullin delivered to representatives of Greenberg Traurig, LLP (which we refer to as “Greenberg Traurig”), counsel to SEGA SAMMY HOLDINGS, proposed drafts of documents for a possible financing transaction as well as a revised draft of the exclusivity agreement.

 

Between April 8, 2023 and April 12, 2023, representatives of Sheppard Mullin and of Greenberg Traurig exchanged mark-ups to drafts of documents for a possible financing transaction, including documents regarding the assignment of the credit facility for the $30 million term loan to SEGA SAMMY HOLDINGS or an affiliate thereof, the amendment of the existing credit facility for the $30 million term loan, and mark-ups to the exclusivity agreement.

 

In conjunction with the assignment of the credit facility for the $30 million term loan to an affiliate of SEGA SAMMY HOLDINGS, on April 12, 2023, GAN entered into an exclusivity agreement with SEGA SAMMY HOLDINGS, pursuant to which GAN agreed to exclusively negotiate with SEGA SAMMY HOLDINGS regarding a possible strategic transaction involving the sale of significant equity or assets of GAN. The exclusivity agreement had an initial term of 30 days, which was automatically extended for an additional 45 days if SEGA SAMMY HOLDINGS provided preliminary terms for a proposed acquisition of GAN that were reasonably acceptable to GAN.

 

On April 13, 2023, GAN entered into an amendment to credit facility for the $30 million term loan, Beach Point assigned its position under the credit facility to an affiliate of SEGA SAMMY HOLDINGS, and GAN entered into a second amendment to the credit facility with an affiliate of SEGA SAMMY HOLDINGS pursuant to which, among other things, GAN borrowed an additional $12 million of term loans. The second amendment, which became effective on April 14, 2023: (a) decreased the interest rate on all outstanding term loans to eight percent per annum, payable in kind, (b) extended the maturity date for all term loans to April 14, 2026, and (c) implemented a prepayment fee of 14% for any prepayment on any of the term loans during the first five months after April 14, 2023, which fee would become payable if GAN entered into a definitive agreement relating to change of control of GAN within such five month period.

 

On April 18, 2023, representatives of SEGA SAMMY HOLDINGS were provided access to GAN’s virtual data room, which was updated to include more recent finance, operating and regulatory materials relating to GAN’s business.

 

Also on April 18, 2023, representatives of each of GAN’s management, SEGA SAMMY HOLDINGS, B. Riley and SMBC Nikko held a video conference to discuss workstreams and due diligence processes.

 

On May 12, 2023, representatives of SEGA SAMMY HOLDINGS delivered a non-binding letter of intent to GAN, proposing to acquire all of the outstanding ordinary shares of GAN for an all-cash purchase price in the range of $1.46 to $2.12 per share. Following receipt of the non-binding letter of intent, on May 15, 2023, the GAN board of directors established the special committee and delegated to it the authority to evaluate strategic transactions including the sale of all or part of GAN.

 

On May 15, 2023, the special committee met, with representatives of Sheppard Mullin and B. Riley in attendance, to review the non-binding letter of intent received from SEGA SAMMY HOLDINGS. Representatives of B. Riley reviewed the process that had taken place to date and reviewed a preliminary financial analysis of GAN. Representatives of Sheppard Mullin reviewed the material terms of the letter of intent. The special committee directed B. Riley to reply to SEGA SAMMY HOLDINGS with a counterproposal of $4.00 per share. SEGA SAMMY HOLDINGS did not agree with the $4.00 per share valuation and the non-binding letter of intent was not signed. The term of the exclusivity agreement expired and at the request of the special committee, GAN management, with the assistance of B. Riley, began soliciting additional prospective bidders for a strategic transaction involving the sale of all or part of GAN.

 

Between May 17, 2023 and May 22, 2023, representatives of B. Riley and of SMBC Nikko engaged in discussions regarding GAN’s valuation in the non-binding letter of intent delivered to GAN by representatives of SEGA SAMMY HOLDINGS on May 12, 2023.

 

On May 23, 2023, SEGA SAMMY HOLDINGS submitted a revised non-binding letter of intent to GAN, proposing to acquire all of the outstanding ordinary shares of GAN for an all-cash purchase price of $1.80 to $2.20 per share, subject to the parties entering into another exclusivity agreement.

 

On May 24, 2023 the special committee met, with representatives of B. Riley in attendance, to discuss the revised non-binding letter of intent from SEGA SAMMY HOLDINGS, including its request for exclusivity. The special committee directed B. Riley to reply to SEGA SAMMY HOLDINGS with a counterproposal at a price above $3.00 per share and to inform SEGA SAMMY HOLDINGS that GAN would not enter into a new exclusivity agreement unless the parties reached preliminary agreement on valuation. Thereafter representatives of SMBC Nikko and representatives of B. Riley continued to meet to discuss valuation for a potential transaction.

 

On May 26, 2023, representatives of B. Riley and of SMBC Nikko discussed continuing confirmatory due diligence without exclusivity and other process-related matters.

 

On June 11, 2023, representatives of GAN’s management and of SEGA SAMMY HOLDINGS discussed matters related to GAN’s operations and strategy.

 

From June 26, 2023 to June 27, 2023, representatives of GAN’s management and of SEGA SAMMY HOLDINGS held meetings at GAN’s offices in California to discuss matters relating to due diligence.

 

On July 3, 2023, representatives of an online sportsbook operator (Bidder G) corresponded with representatives of B. Riley regarding Bidder G’s proposal to operate GAN’s B2C sports betting business under a multi-year license arrangement with an option to purchase the business at the end of the license term.

 

On July 11, 2023, representatives of GAN’s management and of SEGA SAMMY HOLDINGS held a meeting to discuss business strategy and valuation-related items.

 

On July 18, 2023, a U.S. based casino operator (Bidder H) submitted a non-binding indication of interest to GAN proposing to acquire GAN through a reverse merger whereby Bidder H would (a) complete a pending disposition of a portion of its business and then (b) combine its business operations with those of GAN. The non-binding indication of interest contemplated that, immediately following the closing of the transaction with GAN, Bidder H’s shareholders would own 80% of the outstanding equity of the combined company and the GAN shareholders would own 20% of the outstanding equity of the combined company. Representatives of B. Riley corresponded with the special committee regarding the estimated value of Bidder H’s business based on current industry multiples of similar businesses and the implied valuation of GAN based the GAN shareholders owing 20% of the combined company immediately following the closing of the transaction. The special committee believed the implied valuation of GAN in Bidder H’s proposal did not reflect a substantial premium to the then-current trading price of GAN’s ordinary shares and was lower than the all-cash purchase price of $1.80 to $2.20 per share in SEGA SAMMY HOLDINGS’ May 23, 2023 revised non-binding letter of intent. The special committee, with the assistance of B. Riley, also considered the potential for greater execution risk associated with the Bidder H proposal as compared to a potential transaction with SEGA SAMMY HOLDINGS.

 

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On July 21, 2023, a sports betting operator in Europe (Bidder I) submitted a non-binding letter of intent to GAN proposing to acquire GAN’s B2C sports betting business for cash at a valuation of 4.0 to 6.5 times trailing 12 month adjusted EBITDA, subject to its due diligence of the business.

 

Also on July 21, 2023, representatives of GAN’s management and of SEGA SAMMY HOLDINGS discussed the strategic review process and valuation-related items.

 

On July 24, 2023, the special committee met with representatives of B. Riley in attendance to review each of the proposals received to date: the all-cash offer from SEGA SAMMY HOLDINGS reflected in SEGA SAMMY HOLDINGS’ May 23, 2023 revised non-binding letter of intent, the proposal to license the sports betting business to Bidder G, the reverse merger proposal from Bidder H, and the offer for the B2C sports betting business from Bidder I. Following such review, the special committee noted that (a) the proposal from Bidder G required GAN to give up control of its B2C sports betting business without a substantial up-front payment, (b) the implied valuation of GAN in Bidder H’s proposal was not better, from a financial point of view, for the GAN shareholders than the all-cash purchase price of $1.80 to $2.20 per share in SEGA SAMMY HOLDINGS’ May 23, 2023 revised non-binding letter of intent and (c) the proposal from Bidder I was subject to additional diligence and negotiations over adjustments to GAN’s EBIDTA. After discussion and evaluation, the special committee determined to not enter into any of the proposed non-binding letters of intent or indications of interest on the terms presented, and directed B. Riley to continue negotiations to seek better terms with each bidder.

 

On August 1, 2023, SEGA SAMMY HOLDINGS submitted a revised non-binding letter of intent to GAN, proposing to acquire all of the outstanding ordinary shares of GAN for an all-cash purchase price of $2.51 per share subject to confirmatory due diligence.

 

On August 2, 2023, the special committee met with representatives of Sheppard Mullin and B. Riley in attendance to review the terms proposed in the revised non-binding letter of intent submitted by SEGA SAMMY HOLDINGS, including the request for exclusivity. After discussion and evaluation, the special committee directed Sheppard Mullin and B. Riley to continue negotiations with SEGA SAMMY HOLDINGS.

 

On August 5, 2023, Bidder H submitted a revised non-binding indication of interest to GAN proposing to acquire GAN through a reverse merger. The revised non-binding indication interest contemplated that, immediately following the closing of the transaction with GAN, Bidder H’s shareholders would own 70% of the outstanding equity of the combined company and the GAN shareholders would own 30% of the outstanding equity of the combined company, and proposed a 21-day exclusivity period during with Bidder H would conduct confirmatory due diligence. The special committee determined, after consultation with B. Riley, that the valuation for GAN implied by the revised non-binding indication of interest was less than the all-cash proposal contemplated by the revised non-binding letter of intent received from SEGA SAMMY HOLDINGS on August 1, 2023. Moreover, Bidder H had not requested or conducted due diligence on the materials in the virtual data room, increasing the due diligence and execution risk associated with its proposal. The special committee determined that the terms contemplated by the revised offer non-binding indication of interest from Bidder H were not in the best interests of the GAN shareholders and directed B. Riley to communication the same to Bidder H.

 

On August 7, 2023, representatives of SMBC Nikko submitted a further revised non-binding letter of intent on behalf of SEGA SAMMY HOLDINGS to representatives of B. Riley, which included a $2.51 per share purchase price subject to a working capital adjustment, a non-solicitation provision, and a 30-day exclusivity period with an automatic 30-day extension. Representatives of B. Riley forwarded the revised letter of intent to representatives of Sheppard Mullin.

 

On August 8, 2023, representatives of Sheppard Mullin corresponded with the special committee regarding the terms of the revised non-binding letter of intent, including the exclusivity provision. Over the next two days, Sheppard Mullin received comments from the special committee on various terms of the revised non-binding letter of intent.

 

On August 9, 2023, GAN issued its earnings release for the three months ended June 30, 2023. The earnings release stated that GAN had received indications of interest from several prospective bidders interested in acquiring all or part of GAN’s business.

 

On August 10, 2023, at the special committee’s request, representatives of Sheppard Mullin sent a revised draft of the non-binding letter of intent to representatives of Greenberg Traurig. The revised draft eliminated the working capital adjustment, introduced a fiduciary out for the non-solicitation provision, and revised the exclusivity period to an initial 30-days with two 15-day extensions.

 

On August 11, 2023, Wynn Resorts, one of GAN’s largest B2B online casino operators, unexpectedly announced that it would be reducing its online gaming operations and would terminate online operations in eight states in the U.S.

 

On August 17, 2023, representatives of GAN’s management and of SEGA SAMMY HOLDINGS discussed GAN’s business plan.

 

Also on August 17, 2023, representatives of SEGA SAMMY HOLDINGS submitted a revised draft letter of intent to representatives of GAN for an all-cash offer of $2.51 per share and a request for an exclusivity period of 30 days, which could be extended for up to two additional 15-day periods, subject to specified conditions being met.

 

From August 17 to August 27, 2023, representatives of Greenberg Traurig and Sheppard Mullin had numerous discussions concerning the terms of the non-binding letter of intent and exchanged additional drafts.

 

On August 22, 2023, representatives of GAN’s management and of SEGA SAMMY HOLDINGS discussed GAN’s business strategy.

 

On August 23, 2023, representatives of B. Riley and of SMBC Nikko discussed matters in SEGA SAMMY HOLDINGS’ August 17, 2023 revised letter of intent, including provisions related to the extension or termination of exclusivity.

 

On August 24, 2023, representatives of B. Riley communicated to representatives of SMBC Nikko that GAN, in the spirit of moving the transaction forward, would be willing to drop its request that exclusivity would automatically terminate if SEGA SAMMY HOLDINGS reduced its per share offer price by more than 10%.

 

On August 25, 2023, representatives of SMBC Nikko communicated to representatives of B. Riley that SEGA SAMMY HOLDINGS would agree to submit an offer at $2.51 per share if such price was based on information available to SEGA SAMMY HOLDINGS up until July 31, 2023.

 

On August 28, 2023, representatives of Greenberg Traurig sent a revised draft of the non-binding letter of intent to representatives of Sheppard Mullin. The revised draft contemplated the acquisition by SEGA SAMMY HOLDINGS (or its affiliate) of all of GAN’s issued ordinary shares at a price of $2.51 per share, subject to the completion of confirmatory due diligence, and included a 30-day exclusivity period, which would automatically extend for two additional 15-day periods unless either party gave notice of intent to terminate discussions.

 

On August 28, 2023, the special committee met with representatives of B. Riley and of Sheppard Mullin in attendance to discuss the revised draft of the non-binding letter of intent received by representatives of Sheppard Mullin earlier that day. Following discussion of the terms of such draft and following an evaluation of the status of negotiations with other bidders, including the most recent indications of interest from Bidder G, Bidder H, and Bidder I, the special committee determined to authorize GAN to enter into the non-binding letter of intent received by representatives of Sheppard Mullin earlier that day.

 

On August 29, 2023, GAN and SEGA SAMMY HOLDINGS entered into the non-binding letter of intent discussed above (which we refer to as the “August 29 letter of intent”).

 

On August 31, 2023, Bidder I submitted a revised non-binding indication of interest to GAN proposing to acquire GAN’ B2C sports betting business at a purchase price of $65 million, subject to due diligence review. At the request of the special committee, GAN’s management informed Bidder I that GAN was under exclusivity and could not discuss Bidder I’s revised non-binding indication of interest.

 

From September 4, 2023 to September 6, 2023, Seamus McGill and Dermot Smurfit attended meetings with representatives of SEGA SAMMY HOLDING at SEGA SAMMY HOLDINGS’ offices in Japan to discuss the prospects of GAN’s business and matters related to the merger contemplated by the August 29 letter of intent.

 

On September 10, 2023, representatives of Greenberg Traurig delivered the initial draft of the merger agreement to representatives of Sheppard Mullin.

 

On September 11, 2023, the Chilean federal government approved resolutions proposed by the Chilean Economic Commission and Chamber of Deputies that paved the way for the regulation of gaming in that country and the creation of a framework for prosecuting illegal gaming operations.

 

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On September 12, 2023, the special committee met with representatives of Sheppard Mullin in attendance. At the meeting, Mr. McGill provided an update on the discussions at the meetings with representatives of SEGA SAMMY HOLDINGS in Japan described above. The special committee then discussed next steps and potential timing for the merger contemplated by the August 29 letter of intent.

 

On September 13, 2023, representatives of Sheppard Mullin and of Greenberg Traurig met to discuss the initial draft of the merger agreement.

 

On September 14, 2023, representatives of Sheppard Mullin sent an email to members of the special committee enclosing a list of certain key issues for the special committee to consider related to provisions in the initial draft of the merger agreement, including proposed interim funding requirements, conditions to closing, the anticipated closing date, the end date and the amount of termination fees.

 

On September 15, 2023, the special committee met with representatives of Sheppard Mullin in attendance to review the draft merger agreement. Representatives of Sheppard Mullin discussed certain of the key business terms at issue and received direction from the special committee on those terms.

 

On September 19, 2023, representatives of Sheppard Mullin delivered a mark-up of the merger agreement to representatives of Greenberg Traurig.

 

On September 22, 2023, representatives of SMBC Nikko communicated to representatives of B. Riley that SEGA SAMMY HOLDINGS determined to decrease the per share purchase price for the proposed acquisition of GAN from $2.51 to $2.05, citing concerns over the impact of Wynn’s retrenchment of its online gaming business. Representatives of B. Riley communicated the same to the special committee. The special committee directed B. Riley to inform SMBC Nikko that the special committee did not believe that a decrease the per share purchase price was warranted.

 

On September 25, 2023, Dermot Smurfit resigned as GAN’s chief executive officer and from all director and officer positions with GAN and its affiliated entities.

 

Also on September 25, 2023, the exclusivity period under the August 29 letter of intent was automatically extended by 15 days to October 13, 2023.

 

On September 26, 2023, the GAN board of directors appointed Seamus McGill, the then chairman of the GAN board of directors, as GAN’s interim chief executive officer.

 

Between September 27, 2023 and October 2, 2023, representatives of B. Riley and of SMBC Nikko discussed matters related to valuation, due diligence, management changes at GAN and the merger agreement.

 

On September 29, 2023, representatives of Greenberg Traurig delivered a revised draft of the merger agreement to representatives of Sheppard Mullin, which did not specify a per share purchase price.

 

On October 2, 2023, the special committee met with representatives of Sheppard Mullin and of B. Riley in attendance. Representatives of B. Riley reviewed with the special committee its most recent discussions with SMBC Nikko regarding valuation and confirmatory due diligence. Representatives of Sheppard Mullin reviewed with the special committee the status of negotiations over key provisions in the draft merger agreement, including provisions related to the per share purchase price, interim financing, conditions to closing, the end date, and termination fees. The special committee directed B. Riley to communicate to SMBC Nikko a counter on the per share purchase price for the proposed acquisition of GAN at $2.38 per share.

 

On October 3, 2023, representatives of GAN and of SEGA SAMMY HOLDINGS discussed matters related to the potential merger.

 

On October 4, 2023, the special committee instructed representatives of B. Riley to inform representatives of SMBC Nikko that GAN agreed to SEGA SAMMY HOLDINGS’ $2.05 per share offer price.

 

On October 5, 2023, representatives of SMBC Nikko informed representatives of B. Riley that SEGA SAMMY HOLDINGS intended to lower its previously communicated $2.05 per share offer price due to changes relating to GAN’s operations since that per share offer price was communicated on September 22, 2023.

 

On October 7, 2023, representatives of each of SMBC Nikko, B. Riley, SEGA SAMMY HOLDINGS, Greenberg Traurig, GAN and Blank Rome LLP, gaming regulatory counsel for GAN, met to discuss Dermot Smurfit’s separation-related matters from a labor and gaming regulatory perspective.

 

From October 10, 2023 to October 12, 2023, representatives of each of GAN and SEGA SAMMY HOLDINGS attended the Global Gaming Expo in Nevada.

 

On October 10, 2023, representatives of GAN advised representatives of SEGA SAMMY HOLDINGS that while negotiations had been ongoing, it believed an agreement could be reached prior to October 13, 2023 and was therefore GAN was electing not to extend exclusivity under the August 29 letter of intent beyond that date.

 

On October 11, 2023, representatives of SMBC Nikko advised representatives of B. Riley that SEGA SAMMY HOLDINGS was reducing the per share purchase price in its offer to $1.90 per share, subject to agreement on outstanding legal issues, citing concerns over risks related to the potential regulatory changes in Chile as well as the recent changes in GAN management.

 

On October 19, 2023, representatives of Greenberg Traurig and Sylvia Tiscareño, general counsel for GAN, held additional discussions related to GAN’s management changes and the separation of Dermot Smurfit.

 

Between October 12, 2023 and November 3, 2023, representatives of each of GAN and SEGA SAMMY HOLDINGS continued to negotiate the terms of the merger agreement and related ancillary agreements, with representatives of each of Sheppard Mullin and Greenberg Traurig exchanging multiple drafts and holding regular calls to discuss open terms in the draft merger agreement and their client’s respective positions. Among the provisions most negotiated were those related to the ability of the GAN board of directors to effect an adverse recommendation change if the failure to take such action would be inconsistent with its fiduciary duties under applicable law, conditions to closing, termination rights and termination fees. During this period, representatives of Sheppard Mullin kept the special committee and the GAN board of directors fully apprised of the status of negotiations and received direction and input from the special committee on all key terms in the draft merger agreement.

 

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Following the expiration of exclusivity under the August 29 letter of intent, at the request of the special committee, GAN management re-engaged with representatives of Bidder I concerning a possible sale of GAN’s sports betting business to Bidder I. Bidder I expressed concern regarding the potential effects on GAN’s B2C business of the potential changes in the regulation of gaming in Chile following the Chilean federal government’s approval on September 11, 2023 of resolutions proposed by the Chilean Economic Commission and Chamber of Deputies that paved the way for the regulation of gaming in that country and the creation of a framework for prosecuting illegal gaming operations. Bidder I did not engage in significant due diligence and GAN did not engage in substantive negotiations with Bidder I with respect to its August 31, 2023 non-binding indication of interest.

 

On October 31, 2023, Bank 2 contacted GAN management on behalf of Bidder C expressing interest in evaluating an acquisition of all of GAN, not just GAN’s B2C sports betting business. GAN management advised Bidder C that, based on the status of GAN’s planned operations, Bidder C would have to become licensed in Nevada as part of the proposed acquisition. Bidder C did not engage, through Bank 2 or otherwise, in any further discussion or negotiations after that initial call.

 

On November 5, 2023, the special committee met with representatives of B. Riley and Sheppard Mullin in attendance. Representatives of B. Riley reported that SEGA SAMMY HOLDINGS’ best and final offer was $1.97 per share. Representatives of Sheppard Mullin provided the special committee with an update on the provisions in the merger agreement related to conditions to closing, the anticipated closing date, the end date, and the amount of the termination fees payable by the parties in the event of termination of the merger agreement in certain circumstances and the circumstances under which the termination fees would be payable. The special committee directed B. Riley and Sheppard Mullin to continue negotiations to complete the merger agreement at a $1.97 per share purchase price.

 

On November 6, 2023, representatives of Sheppard Mullin and of Greenberg Traurig discussed final revisions to key terms in the merger agreement including, the per share purchase price, conditions to closing, the anticipated closing date and termination fees. Later that day, representatives of Sheppard Mullin provided the special committee with an updated draft of the merger agreement, together with a summary of the key deal terms.

 

On November 7, 2023, the special committee met with representatives of Sheppard Mullin and of B. Riley in attendance to review the terms of the draft merger agreement. The representatives of Sheppard Mullin reviewed the terms of the draft merger agreement, including the per share purchase price, conditions to closing, the ability of the GAN board of directors to effect an adverse recommendation change if the failure to take such action would be inconsistent with its fiduciary duties under applicable law, the amount of the termination fees payable by the parties in the event of termination of the merger agreement in certain circumstances and the circumstances under which the termination fees would be payable. The representatives of B. Riley reviewed its financial analysis of the $1.97 per share consideration to be received by holders of the ordinary shares in the proposed merger and rendered an oral opinion to the special committee, which was confirmed in writing by delivery of B. Riley’s written opinion dated November 7, 2023, to the effect that, as of such date and based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by B. Riley in preparing its opinion, the $1.97 per share consideration to be received by the holders of GAN ordinary shares in the merger pursuant to the merger agreement was fair, from a financial point of view, to those shareholders.

 

The special committee, in consultation with representative s of B. Riley, also considered whether any of the other bidders who previously submitted non-binding indications of interest would be likely to offer a superior offer. The special committee took note of the fact that GAN had publicly announced its intention to evaluate strategic alternatives, had actively solicited a number of possible strategic investors, and reviewed and evaluated all non-binding indications of interest received. The special committee also considered the risk of continuing the strategic alternative process, including the risks that SEGA SAMMY HOLDINGS would withdraw its offer, and risks related to business execution, changes in the capital markets and interest rates, and changes in customer demand, any of which could have a material impact on GAN’s business and the value of GAN’s ordinary shares in a future transaction. Following the foregoing considerations, the special committee unanimously determined to recommend to the GAN board of directors that it (a) determine that $1.97 per share merger consideration constitutes fair value for each ordinary share in accordance with the Bermuda Companies Act, (b) determine that the terms of the merger agreement, the statutory merger agreement, the merger and the other agreements and transactions contemplated by the merger agreement and the statutory merger agreement are in the best interests of GAN and its shareholders, (c) approve and declare advisable GAN’s execution, delivery and performance of the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, (d) direct that the merger agreement and the statutory merger agreement be submitted to GAN shareholders for adoption and approval and (e) recommend that GAN shareholders vote in favor of adoption and approval of the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger

 

Later on November 7, 2023, and after the special committee meeting described above, the GAN board of directors met with representatives of Sheppard Mullin and of B. Riley in attendance. The representatives of Sheppard Mullin reviewed the terms of the draft merger agreement, including changes to material provisions of the merger agreement from the last version reviewed by the GAN board of directors. At the same meeting, representatives of B. Riley reviewed with the GAN board of directors B. Riley’s financial analysis of the $1.97 per share consideration that it had reviewed with the special committee and informed the GAN board of directors that B. Riley had rendered its opinion to the special committee. The GAN board of directors also discussed, in consultation with representatives of B. Riley, the status of the other bidders and the special committee’s assessment that the other bidders were unlikely to submit a bid at a premium to the $1.97 per share consideration contemplated by the proposed merger agreement, as well as the risks involved in deferring entering into the proposed merger agreement, including those risks considered by the special committee described above. After discussing each of the above matters in full and considering each of the factors set forth below in “—GAN’s Reasons for the Merger and Recommendation of the GAN Board of Directors,” below, among others, the GAN board of directors unanimously (a) determined that the merger consideration constitutes fair value for each ordinary share in accordance with the Bermuda Companies Act, (b) determined that the terms of the merger agreement, the statutory merger agreement, the merger and the other agreements and transactions contemplated by the merger agreement and the statutory merger agreement are in the best interests of GAN and its shareholders, (c) approved and declared advisable GAN’s execution, delivery and performance of the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, (d) directed that the merger agreement and the statutory merger agreement be submitted to GAN shareholders for adoption and approval, and (e) recommends that GAN shareholders vote in favor of adoption and approval of the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger.

 

Later on November 7, 2023, and after the meeting of the GAN board of directors described above, the parties executed the merger agreement and GAN issued a press release announcing its entry into the merger agreement.

 

On November 8, 2023, prior to the opening of trading on The Nasdaq Capital Market, GAN filed a Current Report on Form 8-K with the SEC reporting its the entry into the merger agreement.

 

On December 15, 2023, GAN, SSC and Merger Sub entered into that certain Amendment to Agreement and Plan of Merger to conform the definition of the “Requisite Shareholder Approval” in Section 3.2(d) of the merger agreement to the voting standard set forth in GAN’s bye-laws. That amendment provides that the Requisite Shareholder Approval is a simple majority of the votes cast at a shareholders meeting in which at least two persons holding or representing by proxy more than fifty percent of the voting power represented by GAN’s issued ordinary shares.

 

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GAN’s Reasons for the Merger and Recommendation of the GAN Board of Directors

 

The GAN board of directors, based on the unanimous recommendation of the special committee, unanimously (a) determined that the merger consideration constitutes fair value for each ordinary share in accordance with the Bermuda Companies Act, (b) determined that the terms of the merger agreement, the statutory merger agreement, the merger and the other agreements and transactions contemplated by the merger agreement and the statutory merger agreement are in the best interests of GAN and its shareholders, (c) approved and declared advisable GAN’s execution, delivery and performance of the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, (d) directed that the merger agreement and the statutory merger agreement be submitted to GAN shareholders for adoption and approval and (e) recommends that GAN shareholders vote in favor of adoption and approval of the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger. The GAN board of directors made these determinations in accordance with and upon the unanimous recommendation of the special committee and after consultation with GAN’s management and independent legal and financial advisors and consideration of a number of factors.

 

For purposes of Section 106(2)(b)(i) of the Bermuda Companies Act, the GAN board of directors has considered and determined $1.97, without interest and less any applicable withholding taxes, to be fair value for each ordinary share.

 

The GAN board of directors unanimously recommends that you vote: (i) “FOR” the merger proposal; (ii) “FOR” the compensation advisory proposal; and (iii) “FOR” the adjournment proposal.

 

Positive Factors Relating to the Merger

 

As described in the section of this proxy statement titled “The Merger — Background of the Merger,” the GAN board of directors, prior to and in reaching its determination at its meeting on November 7, 2023, that the terms of the merger agreement, the statutory merger agreement, the merger and the other agreements and transactions contemplated by the merger agreement and the statutory merger agreement are in the best interests of GAN and its shareholders, consulted with GAN’s management, financial advisors and outside legal counsel and considered a variety of potentially positive factors relating to the merger, including, but not limited to, the following (which are not necessarily listed in order of relative importance):

 

Treatment of Ordinary Shares

 

  The value to be received by the holders of ordinary shares in the merger, including that the all cash consideration to be received represents a significant premium relative to the trading price of the ordinary shares. The merger consideration of $1.97 per ordinary share represents a premium of over 120% to the closing price of an ordinary share on November 7, 2023, the last full trading day prior to the public announcement that the parties entered into the merger agreement, which was $0.8918.

 

  That the merger consideration is $1.97 per ordinary share and GAN’s fully diluted loss per ordinary share was ($4.66) as of December 31, 2022 and ($0.18) as of September 30, 2023.

 

  The belief of the GAN board of directors that the merger consideration to be received by holders of ordinary shares compared adequately to a range of values of GAN as an independent company based on traditional valuation analyses such as a discounted cash flow analyses, a market approach analyses, analyses of historical cash transaction control premiums paid and comparable precedent transactions analyses, considering:

 

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  Uncertainty regarding execution of GAN’s strategic plan and management projections in light of the evolving regulatory environment, including slower than expected adoption of regulation of gaming in the United States, and potential changes in gaming regulation and taxation in other markets where GAN operates or intends to operate;
     
  That significant casino operators, such as Wynn Resorts, were scaling back their investments in online gaming and the potential impact thereof on GAN’s B2B business;
     
  Uncertainty about GAN’s ability to retain and expand market share in the B2C sports betting business competing against companies with significantly greater brand recognition and capital resources;
     
  The impact of the current macro-economic environment and the potential for slower economic growth to impact consumer discretionary spending;

 

  The costs associated with compliance with regulations pertaining to public companies; and

 

  The historical, current and prospective financial condition, results of operations and business of GAN.

 

  That since January 2021 through the time GAN entered into the merger agreement with SSC, GAN persistently sought a strategic transaction through multiple processes with multiple financial advisors. During that time, dozens of leading gaming industry participants in the casino, online casino and online sports betting industries throughout the world were approached on behalf of GAN and no party expressed a willingness to make an offer in excess of the $1.97 per ordinary share SSC has agreed to pay.

 

  The possibility that, if GAN did not enter into the merger agreement, it could take a considerable amount of time and involve a substantial amount of risk before the trading price of the ordinary shares would reach and sustain the $1.97 per share value of the merger consideration, as adjusted for present value.

 

  The belief of the GAN board of directors, based upon arm’s length negotiations resulting in SSC’s submission of its final offer of $1.97 per share, that the price to be paid by SSC was the highest price per share that SSC was willing to pay for GAN under the then-current facts and circumstances.

 

  The possibility that, if GAN did not enter into the merger agreement, there would likely be few, if any, other parties that would be willing to make an offer in excess of SSC’s offer of $1.97 per ordinary share.

 

  That the merger consideration is to be paid entirely in cash, which will allow holders of ordinary shares to realize, upon closing, a certainty of value in light of the risks and uncertainties inherent in GAN’s prospects and the market, economic and other risks that arise from owning an equity interest in a public company.

 

  The opinion of B. Riley to the special committee on November 7, 2023 to the effect that, as of such date and based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by B. Riley in preparing its opinion, the merger consideration to be received by the holders of ordinary shares in the merger pursuant to the merger agreement was fair from a financial point of view to such holders.

 

  The belief of the GAN board of directors, based on, among other things, a review of GAN’s business, market trends, results of operations and financial condition, and discussions with GAN’s management and its financial and legal advisors, that GAN shareholders will have limited opportunities in the future to realize value in the public market for a variety of reasons, including the fact that the market for the ordinary shares has historically been negatively impacted by low trading volume and limited investor interest.

 

Terms of the Merger Agreement

 

  That the merger agreement was the product of arm’s length negotiations, as well as the belief of the GAN board of directors, based on these negotiations, that these were the most favorable terms to GAN and its shareholders on which SSC was willing to agree under the then-current facts and circumstances.

 

  That the terms and conditions of the merger agreement, including, but not limited to, the representations, warranties and covenants of the parties and the conditions to closing, are reasonable.

 

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  The belief of the GAN board of directors that, based on consultation with GAN’s outside legal counsel, the conditions to the consummation of the merger as set forth in the merger agreement are reasonable and customary, and the likelihood in the view of the GAN board of directors that the merger would be completed because of the limited number, scope and nature of such conditions.

 

  The remedies available under the merger agreement to GAN in the event of any breaches by SSC.

 

  The availability of appraisal rights to GAN shareholders who do not vote in favor of the merger proposal, pursuant to Section 106(6) of the Bermuda Companies Act, which permits eligible shareholders to apply to the Supreme Court of Bermuda to have the fair value of their shares appraised.

 

  That the GAN board of directors is permitted to modify or withdraw its recommendation to shareholders to approve the merger proposal in response to a material fact, change, event, circumstance, condition, development, result or effect that was not known or was not reasonably foreseeable to GAN or any member of the GAN board of directors prior to the execution of the merger agreement (of if known, the consequences of which were not known or reasonably foreseeable as of November 7, 2023) and becomes known to GAN or any member of the GAN board of directors prior to GAN shareholders approving the merger proposal, if the GAN board of directors determines, in good faith, after consultation with its outside financial advisor and legal counsel, that the failure to modify or withdraw its recommendation would be inconsistent with its fiduciary duties to GAN shareholders under applicable law, subject to the payment of a $6.0 million termination fee if SSC terminates the merger agreement (see the section of this proxy statement titled “The Merger Agreement — No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreement”).

 

  The terms of the merger agreement permitting GAN to consider a “superior proposal” received after November 7, 2023 and at any time prior to approval of the merger proposal by GAN shareholders, including:

 

  GAN’s ability, under certain circumstances, to consider and respond to a bona fide, unsolicited written takeover proposal from a third party or engage in discussions or negotiations with the third party making such takeover proposal, in each case if the GAN board of directors or the special committee determines, in good faith, after consultation with its outside financial advisor and outside legal counsel, that such takeover proposal constitutes or could reasonably be expected to result in a superior proposal (see the section of this proxy statement titled “The Merger Agreement — No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements”);

 

  that the terms of the merger agreement provide that, under certain circumstances where a superior proposal has been received, the GAN board of directors is permitted to (a) modify or withdraw its recommendation to shareholders to approve the merger proposal if the GAN board of directors or the special committee determines, in good faith, after consultation with its outside financial advisor and outside legal counsel, that the failure to do so would reasonably be expected to result in a breach by the GAN board of directors of its fiduciary duties under applicable law; and/or (b) terminate the merger agreement to enter into an acquisition agreement in respect of a superior proposal if the GAN board of directors or the special committee determines, in good faith, after consultation with its outside financial advisor and outside legal counsel, that the failure to do so would reasonably be expected to result in a breach by the GAN board of directors of its fiduciary duties under applicable law, subject, in each case, to compliance with certain procedural requirements and the payment of a termination fee (see the section of this proxy statement titled “The Merger Agreement —  No Solicitation of Takeover Proposals; Adverse Recommendation Change; Alternative Acquisition Agreements”).

 

  The absence of any financing condition or contingency to the merger.

 

  That SSC is a well-capitalized company with ample resources to consummate the transaction.

 

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  The business reputation and capabilities of SEGA SAMMY HOLDINGS, SSC and their respective management, and the high likelihood that SSC will proceed to consummate the merger without significant delay, given its financial resources.

 

  SSC’s commitment in the merger agreement to use its reasonable best efforts to consummate the merger (subject to the terms and conditions of the merger agreement).

 

  The ability of the parties to consummate the merger.

 

  The requirement that SSC may be required to pay GAN a reverse termination fee of $6.0 million under certain circumstances after the date of the merger agreement.

 

  The belief of the GAN board of directors, based upon the advice of its financial and legal advisors, that the termination fee and the circumstances in which such termination fee may be payable are reasonable in light of the benefit of the merger and would not be a significant impediment to third parties interested in making an alternative acquisition proposal.

 

  That the merger would be subject to approval by GAN shareholders and that such shareholders would be free to evaluate the merger and vote for or against the adoption and approval of the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger.

 

Risk and Other Considerations of the Merger

 

In the course of its deliberations, the GAN board of directors, in consultation with GAN management, financial advisors and outside legal counsel, also considered a variety of risks and other potentially negative factors relating to the merger, including the following (which are not necessarily listed in order of relative importance):

 

  The risk that the conditions to the consummation of the merger may not be satisfied (including the receipt of required regulatory approvals) and, as a result, the possibility that the merger might not be consummated, or that the consummation might be delayed, even if the merger proposal is approved by GAN shareholders.

 

  The risk of diverting management focus and resources from other strategic opportunities and operational matters during the pendency of the merger.

 

  That restrictions on the conduct of GAN’s business prior to consummation of the merger could delay or prevent GAN from undertaking business opportunities that arise pending consummation of the merger, which opportunities might be lost to GAN if the merger could not be consummated.

 

  The potential negative effect of the pendency of the merger on GAN’s business and relationships with customers, vendors, business partners and employees, including the risk that key employees might not choose to remain employed with GAN, regardless of whether or not the merger is consummated.

 

  The risk that GAN shareholders may not approve the merger proposal.

 

  That, following the consummation of the merger, GAN would no longer exist as an independent, publicly traded company, and that the consummation of the merger and receipt of the all-cash merger consideration, while providing certainty of value upon consummation, would not allow holders of ordinary shares to participate in any future earnings growth of GAN or benefit from any future increase in its value.

 

  That some of GAN’s directors and executive officers have interests in the merger that are different from, or in addition to, their interests as shareholders of GAN generally (see the section of this proxy statement titled “The Merger — Interests of GAN’s Directors and Executive Officers in the Merger”).

 

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  The potential negative effects if the merger is not consummated in a timely manner or at all, including that:

 

  The trading price of the ordinary shares could be adversely affected;

 

  GAN will have incurred significant transaction and opportunity costs attempting to complete the merger;

 

  GAN could lose customers, suppliers, business partners and employees, including key sales and other personnel;

 

  GAN’s business may be subject to significant disruption and decline;

 

  The market’s perceptions of GAN’s prospects could be adversely affected; and

 

  GAN’s directors, officers and other employees will have expended considerable time and effort to consummate the merger.

 

  That, notwithstanding GAN’s specific performance remedy under the merger agreement, GAN’s remedy in the event of a breach of the merger agreement by SSC may be limited to receipt of the $6.0 million reverse termination fee and that under certain circumstances GAN may not be entitled to the reverse termination fee or monetary damages at all.

 

  The significant costs involved in connection with entering into the merger agreement and consummating the merger (many of which are payable whether or not the merger is consummated), including in connection with any litigation that may arise in the future, and the substantial time and efforts of GAN’s management required to complete the merger, which may disrupt its normal business operations and have a negative effect on its financial results.

 

  That any gain realized by GAN shareholders as a result of the merger will generally be taxable for U.S. federal income tax purposes to those shareholders that are U.S. persons subject to taxation in the United States.

 

  The terms of the merger agreement that either individually or in combination, could discourage potential acquirors from making a competing bid to acquire GAN, including:

 

  The terms of the merger agreement placing certain limitations on the ability of GAN to solicit, initiate, propose, encourage, facilitate or assist any inquiries, discussions or requests regarding any proposal or offer that constitutes, or could reasonably expected to lead to, a takeover proposal;

 

  That restrictions in the merger agreement on GAN’s ability to terminate the merger agreement in connection with the receipt of a “superior proposal,” including that the GAN board of directors must (i) provide five business days’ written notice to SSC of its intention to effect an adverse recommendation change or terminate the merger agreement in order to provide SSC with an opportunity to match such superior proposal and (ii) negotiate in good faith with SSC during such period, and the discouraging effect this may have on potential other bidders; and

 

  That GAN will be required to pay to SSC a $6.0 million termination fee if the merger agreement is terminated under certain circumstances (which termination fee the GAN board of directors determined was reasonable and customary), including the potential effect of the termination fee to deter other potential bidders from making an alternative acquisition proposal for GAN, and the impact of the termination fee on GAN’s ability to engage in another transaction for 12 months if the merger agreement is terminated under certain circumstances.

 

After taking into account the factors set forth above, as well as others, the GAN board of directors concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the merger were outweighed by the potential benefits of the merger to GAN shareholders. Accordingly, the GAN board of directors unanimously, based on the unanimous recommendation of the special committee, (a) determined that the merger consideration constitutes fair value for each ordinary share in accordance with the Bermuda Companies Act, (b) determined that the terms of the merger agreement, the statutory merger agreement, the merger and the other agreements and transactions contemplated by the merger agreement and the statutory merger agreement are in the best interests of GAN and its shareholders, (c) approved and declared advisable GAN’s execution, delivery and performance of the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, (d) directed that the merger agreement and the statutory merger agreement be submitted to GAN shareholders for adoption and approval and (e) recommends that GAN shareholders vote in favor of adoption and approval of the merger agreement, the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger.

 

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The foregoing discussion of the factors considered by the GAN board of directors is not intended to be exhaustive, but rather a summary of the material factors considered by the GAN board of directors. In reaching its decision to approve the merger agreement and the statutory merger agreement, including the merger and other transactions contemplated by the merger agreement and the statutory merger agreement, the GAN board of directors did not find it practicable to, and did not, quantify or assign any relative weights to the specific factors considered in reaching its determinations and recommendations, and individual directors may have given different weights to different factors. The GAN board of directors did not undertake to many any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination and recommendation. The GAN board of directors considered the various factors as a whole and based its recommendation on the totality of information presented, including discussions with, and questioning of, GAN’s management, financial advisors and outside legal counsel, and overall considered the factors to be favorable to, and to support, its determination.

 

The foregoing discussion of the information and factors considered by the GAN board of directors is forward-looking in nature. This information should be read in light of the factors described under the section of this proxy statement titled “Cautionary Statement Concerning Forward-Looking Information.”

 

Opinion of GAN’s Financial Advisor

 

On November 7, 2023, B. Riley rendered to the special committee its oral opinion (which was subsequently confirmed in writing by delivery of B. Riley’s written opinion dated November 7, 2023), to the effect that, as of November 7, 2023, and based upon and subject to the qualifications, limitations, assumptions and other matters considered by B. Riley in connection with the preparation of the opinion, the merger consideration to be received by the holders of ordinary shares in the merger pursuant to the merger agreement was fair from a financial point of view to such holders.

 

B. Riley’s opinion was directed to the special committee (in its capacity as such) and only addressed the fairness, from a financial point of view, to the holders of ordinary shares of the merger consideration to be received by such holders in the merger pursuant to the merger agreement and the statutory merger agreement and did not address any other aspect or implication of the merger, the merger agreement, the statutory merger agreement or any other agreement or understanding entered into in connection with the merger or otherwise. The summary of B. Riley’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex B to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by B. Riley in preparing its opinion. However, neither B. Riley’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement is intended to be, and they do not constitute, a recommendation to the special committee, the GAN board of directors, GAN, any security holder of GAN or any other person as to how to act or vote on any matter relating to the merger or otherwise.

 

In arriving at its opinion, B. Riley, among other things:

 

  Reviewed the financial terms of a draft, dated November 3, 2023, of the merger agreement;

 

  Reviewed certain publicly available business and financial information relating to GAN;

 

  Reviewed certain other information relating to GAN concerning its business, financial condition and operations, made available to B. Riley by GAN, including forecasts with respect to the future financial performance of GAN prepared and furnished to B. Riley by GAN management (which we refer to as the Base Case Projections and the Downside Case Projections and which are described in the section of this proxy statement titled “Certain GAN Prospective Financial Information” beginning on page 40));

 

  Held discussions with members of senior management of GAN concerning the merger and the business, financial condition, and strategic objectives of GAN;

 

  Reviewed certain publicly available financial data, stock market performance data and trading multiples of companies which B. Riley deemed relevant;

 

  Reviewed the publicly available financial terms of certain other business combinations that B. Riley deemed relevant; and

 

  Performed such other financial studies, analyses and investigations, and considered such other matters, as B. Riley deemed necessary or appropriate for purposes of rendering its opinion.

 

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In preparing its opinion, at the special committee’s direction, B. Riley relied, without assuming responsibility or liability for independent verification, upon the accuracy and completeness of all financial and other information available from public sources and all other information provided to B. Riley or otherwise discussed with or reviewed by it. GAN management advised B. Riley and, with the special committee’s consent and approval, B. Riley assumed that the Base Case Projections and the Downside Case Projections were reasonably prepared in good faith and represented GAN management’s best currently available estimates and judgments with respect to the future financial performance of GAN. B. Riley assumed no responsibility for and expressed no view or opinion as to the Base Case Projections, the Downside Case Projections or the respective assumptions on which they were based. At the special committee’s direction, B. Riley used and relied upon the Base Case Projections and the Downside Case Projections for purposes of its analyses and opinion and assumed that the Base Case Projections and the Downside Case Projections provided a reasonable basis upon which to evaluate GAN and the merger. B. Riley also assumed that there were no changes in the assets, financial condition, results of operations, business or prospects of GAN since the respective dates of the last financial statements and other information, financial or otherwise, made available to B. Riley that would be material to its analyses or opinion, and that there was no information or any facts or developments that would make any of the information reviewed by B. Riley inaccurate, incomplete or misleading.

 

The special committee advised B. Riley, and for purposes of its analyses and opinion, B. Riley relied upon and assumed, that (i) GAN’s consolidated financial statements for the six months ended June 30, 2023 and for the year ended December 31, 2022 were prepared on a going concern basis, (ii) GAN historically operated with net losses and had not generated positive cash flows and (iii) GAN’s current financial condition, liquidity resources, and planned near-term cash flows from operations were sensitive to changes in macro-economic conditions and the substantial variability inherent in GAN’s wager-based revenues streams, which factors indicated uncertainty related to the ability of GAN to meet its current obligations as they come due.

 

B. Riley was not asked to, and did not, undertake an independent verification of any information provided to or reviewed by it, nor was B. Riley furnished with any such verification, and B. Riley did not assume any responsibility or liability for the accuracy or completeness of such information. B. Riley did not make an independent evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of GAN, nor did B. Riley evaluate the solvency of GAN under any state or federal laws. B. Riley did not undertake any independent analysis of any pending or threatened litigation, possible unasserted claims or other contingent liabilities to which GAN was a party or may have been subject and its opinion made no assumption concerning, and therefore did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters.

 

B. Riley also assumed, with the special committee’s consent, that (i) in the course of obtaining any regulatory or third party consents or approvals in connection with the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on GAN or the contemplated benefits of the merger, (ii) the representations and warranties made by the parties in the merger agreement were accurate and complete in all respects; (iii) each party to the merger agreement would perform all of its covenants and obligations thereunder; and (iv) the merger would be consummated in accordance with the terms of the merger agreement, without waiver, modification or amendment of any term, condition or provision thereof. B. Riley also assumed that the merger agreement, when executed by the parties thereto, would conform to the draft reviewed by B. Riley in all respects material to its analyses and opinion. B. Riley is not a legal, tax or regulatory advisor and B. Riley relied upon, without independent verification, the assessments of GAN and its legal, tax and regulatory advisors with respect to such matters.

 

B. Riley’s opinion was limited to the fairness, from a financial point of view, to the holders of ordinary shares of the merger consideration to be received by such holders in the merger pursuant to the merger agreement, and B. Riley expressed no view or opinion as to the fairness of the merger to the holders of any other class of securities, creditors or other constituencies of GAN. B. Riley’s opinion did not address any other aspect or implication of the merger, the merger agreement, or any other agreement or understanding entered into in connection with the merger or otherwise. B. Riley also expressed no view or opinion as to the fairness of the amount or nature of the compensation to any of GAN’s officers, directors or employees, or any class of such persons, relative to the merger consideration or otherwise. B. Riley expressed no view or opinion as to the prices or range of prices at which ordinary shares may trade at any time. Furthermore, B. Riley did not express any opinion as to the impact of the merger on the solvency or viability of GAN or SSC, or the ability of GAN or SSC to pay its obligations when they become due.

 

B. Riley’s opinion was necessarily based upon economic, market, monetary, regulatory and other conditions as they existed and could be evaluated, and the information made available to it, as of the date of the opinion. Although subsequent developments may affect its opinion, B. Riley does not have any obligation to update, revise or reaffirm its opinion.

 

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B. Riley’s opinion was for the information of the special committee (in its capacity as such) and the GAN board of directors (in its capacity as such) in connection with their consideration of the merger. B. Riley’s opinion did not constitute a recommendation to the special committee, the GAN board of directors, GAN, any security holder of GAN or any other person as to how to act or vote on any matter relating to the merger or otherwise. B. Riley’s opinion did not address the relative merits of the merger as compared to alternative transactions or strategies that might have been available to GAN or any other party to the merger, nor did it address the underlying business decision of the special committee, the GAN board of directors, GAN or any other party to effect the merger.

 

In preparing its opinion to the special committee, B. Riley performed a variety of analyses, including those described below. The summary of B. Riley’s analyses is not a complete description of the analyses underlying B. Riley’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither B. Riley’s opinion nor its underlying analyses is readily susceptible to summary description. B. Riley arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. While the results of each analysis were taken into account in reaching B. Riley’s overall conclusion with respect to fairness, B. Riley did not make separate or quantifiable judgments regarding individual analyses. Accordingly, B. Riley believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create a misleading or incomplete view of the processes underlying B. Riley’s analyses and opinion.

 

In performing its analyses, B. Riley considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, transaction or business used in B. Riley’s analyses for comparative purposes is identical to GAN or the merger and an evaluation of the results of those analyses is not entirely mathematical. The estimates contained in the Base Case Projections and the Downside Case Projections and the implied value reference ranges indicated by B. Riley’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of GAN. Much of the information used in, and accordingly the results of, B. Riley’s analyses are inherently subject to substantial uncertainty.

 

B. Riley’s opinion was only one of many factors considered by the special committee and the GAN board of directors in evaluating the merger. Neither B. Riley’s opinion nor its analyses were determinative of the merger consideration or of the views of the special committee, the GAN board of directors or management with respect to the merger or the merger consideration. The type and amount of merger consideration payable in the merger were determined through negotiation between GAN and SSC, and the decision to enter into the merger agreement was solely that of the special committee and the GAN board of directors.

 

Material Financial Analyses

 

The following is a summary of the material financial analyses performed by B. Riley in connection with the preparation of its opinion and reviewed with the special committee on November 7, 2023. The order of the analyses does not represent relative importance or weight given to those analyses by B. Riley. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis could create a misleading or incomplete view of B. Riley’s analyses.

 

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For purposes of its analyses, B. Riley reviewed a number of financial metrics, including:

 

  Enterprise Value — generally, the value as of a specified date of the relevant company’s outstanding equity securities plus the amount of debt outstanding, preferred stock and non-controlling interests, and less the amount of excess cash and cash equivalents

 

  Adjusted EBITDA — generally, the amount of the relevant company’s earnings before interest, taxes, depreciation and amortization and adjustments for non-recurring items for a specified time period.

 

Unless the context indicates otherwise, enterprise values and equity values used in the selected companies analysis described below were calculated using the closing price of the ordinary shares and the common stock of the selected companies listed below as of November 3, 2023, and transaction values for the selected transactions analysis described below were calculated on an enterprise value basis based on the value of the equity consideration in the announced transaction and other publicly available information at the time of the announcement. The estimates of the future financial performance of GAN relied upon for the financial analyses described below were based on the Base Case Projections and the Downside Case Projections, which were prepared by Company management and are summarized in the section of this proxy statement entitled “GAN Prospective Financial Information.” The estimates of the future financial performance of the selected companies listed below were based on publicly available research analyst estimates for those companies.

 

Premiums Paid Analysis. B. Riley performed a premiums-paid analysis of the consideration to be received by the holders of ordinary shares. For this analysis, B. Riley reviewed the stock price premiums paid in transactions during the last three years on or prior to November 3, 2023 involving small-cap technology company targets (with a market capitalization of less than $1 billion one day prior to the applicable transaction) trading on a major U.S. exchange, which resulted in 47 transactions. B. Riley calculated the median premiums paid to the target company’s stockholders relative to the target company’s (i) closing share price one day prior to the announcement of the transaction, (ii) volume-weighted average trading price, or “VWAP,” for the seven trading days prior to the announcement of the transaction and (iii) VWAP for the thirty trading days prior to the announcement of the transaction. The results of these calculations are summarized in the following table:

 

Median Transaction Premium
1 Day Prior  7-Day VWAP   30-Day VWAP 
38.9%   31.6%   34.5%

 

Taking into account the results of the premiums paid analysis, B. Riley applied the median premiums indicated above to corresponding trading data for GAN as of November 3, 2023, applying the median one-day premium to the closing price of the ordinary shares of $0.93 per share as of November 3, 2023, the median 7-day VWAP to the 7-day VWAP of the ordinary shares of $0.91 per share as of November 3, 2023 and the median 30-day VWAP to the 30-day VWAP of the ordinary shares of $1.03 per share as of November 3, 2023. The premiums paid analysis indicated an implied value reference range per ordinary share of $1.20 to $1.39, as compared to the merger consideration of $1.97 per ordinary share in the merger pursuant to the merger agreement.

 

Discounted Cash Flow Analysis. B. Riley performed a discounted cash flow analysis of GAN based on the Base Case Projections and the Downside Case Projections provided by Company management. B. Riley applied a terminal value multiple of 6.5x to GAN’s estimated adjusted EBITDA for the fiscal year ending December 31, 2026 under both the Base Case Projections and the Downside Case Projections (in each case, as described in the section of this proxy statement titled “Certain GAN Prospective Financial Information” beginning on page 40) and, in each case, a discount rate of 21.6%. The discounted cash flow analysis indicated an implied value reference range per ordinary share of $0.30 to $2.05, as compared to the merger consideration of $1.97 per ordinary share in the merger pursuant to the merger agreement.

 

Selected Transactions Analysis. B. Riley reviewed certain financial terms of certain transactions involving target companies that B. Riley deemed relevant. The financial data reviewed included enterprise value as a multiple of revenue for the last 12 months available prior to the date of announcement, or “LTM Revenue.”

 

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The selected transactions and corresponding multiples were:

 

Date Announced   Target   Acquiror   Enterprise Value/
LTM Revenue
07/17/23   Angstrom Sports   Entain PLC   NA
07/03/23   Playmaker HQ   Better Collective A/S   5.40x
06/27/23   PointsBet Holdings Limited   Fanatics   0.99x
06/15/23   betFIRST Group   Betsson AB   2.34x
06/13/23   STS Holding S.A.   Entain PLC   6.13x
05/14/23   NeoGames S.A.   Aristocrat Leisure Limited   5.94x
05/01/23   Push Gaming Holding Limited   MGM Resorts International   NA
04/25/23   Wagr   Yahoo Sports   NA
04/11/23   VGKS LLC (Video King)   Everi Holdings Inc.   2.36x
04/05/23   365scores   Entain PLC   NA
02/15/23   Innovation Labs of GiG Media Services   Gaming Innovation Group   NA
01/13/23   MeridianBet   Golden Matrix Group   NA
01/11/23   SuprNat1on AB   Double Down Interactive   1.40x
10/06/22   House Advantage, LLC   Light & Wonder, Inc.   NA
09/08/22   Shape Games   Kambi Group PLC   2.53x
06/22/22   Nomlit City Stockholm Ab   Evolution AB   6.67x
06/14/22   BetEnt B.V.   Entain PLC   NA
05/01/22   LeoVegas AB   MGM Resorts International   1.67x
04/19/22   Better Collective A/S   Futbin   NA
04/11/22   iSoftBet   International Game Technology   5.33x
04/28/22   Pala Interactive LLC   Boyd Interactive Gaming LLC   6.00x
03/23/22   Canada Sports Betting   Better Collective   NA
02/07/22   Avid Gaming   Entain PLC   3.86x
02/01/22   BonusFinder.com   Gambling.com Group   3.50x
01/18/22   Aspire Global PLC   NeoGames S.A.   2.08x
01/11/22   Atlas Gaming   Everi Holdings Inc.   NA
01/11/22   Cracks   Playmaker Capital, Inc   NA
01/04/22   Sportech Lotteries, Inc.   Inspired Entertainment, Inc.   2.84x
12/23/21   Sisal S.p.A.   Flutter Entertainment PLC   2.77x
12/15/21   Bingo Business of 888 Holdings   Broadway Gaming   0.70x
12/14/21   RotoWire   Gambling.com Group   9.17x
11/18/21   Tombola Ltd.   Flutter Entertainment PLC   2.51x
11/05/21   RotoGrinder’s Network   Better Collective   NA
11/04/21   Authentic Gaming   Scientific Games Corporation   NA
10/28/21   Lottery Business of Scientific Games Corporation   Brookfield Business Partners L.P.   11.77x
10/27/21   Degree 53 Ltd.   Bally’s Corporation   NA
10/01/21   lnkabet’s B2C Online Gambling Business   Betsson AB Subsidiary SW Nordic Ltd.   1.35x
10/01/21   Aspire Global PLC B2C Business   Esports Technologies, Inc.   1.03x
09/30/21   Beach Bum Ltd.   Voodoo SAS   4.29x
09/27/21   OpenBet   Endeavor Group Holdings   2.35x
09/09/21   Online Sports Betting & Casino Affiliation in the US of 115 Media   Catena Media   5.60x
09/09/21   William Hill International Business   888 Holding PLC   2.20x
09/08/21   Jawaker FZ LLC   Stillfront Group AB   6.52x
08/24/21   Abios Gamin AB   Kambi Group PLC   15.00x
08/12/21   Unikrn, Inc   Entain PLC   NA
08/09/21   Telescope, Inc.   Bally’s Corporation   NA
08/09/21   Golden Nugget Online Gaming   Draft Kings   14.53x
08/05/21   Score Media and Gaming Inc   Penn National Gaming   NM
08/04/21   Lightning Box   Scientific Games Corporation   NA
08/03/21   Beijing StarLark Technology   Zynga Inc.   NA
08/02/21   SpinX Games Ltd.   Netmarble Corporation   5.07x
07/19/21   Sumo Digital Ltd.   Tencent Holdings Limited   12.20x
07/12/21   Oddschecker Global Media   Bruin Capital Investors   NA
07/02/21   Touch Press Inc.   Team17 Group PLC   3.10x
07/02/21   Playsimple Games Private Limited   MTG Gaming AB   4.11x
06/30/21   compLexity Gaming, LLC   GameSquare Esports Inc.   5.50x
06/30/21   The Outsiders   FunCom SE   NA

 

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06/23/21   Playdemic Ltd.   Electronic Arts Inc.   8.97x
06/22/21   YAGER Development GmbH   Tencent Holdings Limited   NA
06/11/21   BigBox VR, Inc.   Oculus   NA
06/08/21   Godzilab Inc (Crush Them All)   Stillfront Group AB   NA
06/08/21   Streets of Rogue (DogHelm)   tinyBuild, Inc.   NA
06/02/21   Nordeus Limited   Take-Two Interactive Software, Inc.   NA
06/02/21   Wild Streak Gaming   Bragg Gaming Group Inc.   NM
05/31/21   Playdigious SAS   Fragbite Group AB   1.30x
05/27/21   Merge Games   Zordix   0.80x
05/26/21   SportCast Pty Ltd   Scientific Games Corporation   NA
05/25/21   Supersonic Software Ltd.   Miniclip Limited   NA
05/24/21   Factorial Games Co. Ltd.   Pearl Abyss Corp.   NA
05/20/21   Ludia Inc.   Jam City, Inc.   2.00x
05/17/21   GSN Games, Inc.   Game Taco, Inc.   NA
05/17/21   Game Taco, Inc.   Platinum Equity, LLC   NA
05/13/21   Spin Games, LLC   Bragg Gaming Group Inc.   7.50x
05/11/21   Appeal Studios S.A.   THQ Nordic GmbH   NA
05/09/21   Premier Turf Club   PointsBet   NA
05/06/21   Tabcorp Holdings’ Wagering & Media Business   Entain PLC, Apollo Global Management   2.92x
05/04/21   Lineups.com   Catena Media   5.28x
05/03/21   HitPoint Inc./LuckyPoint, Inc.   Penn Interactive   NA
05/03/21   Action Network   Better Collective   6.00x
04/30/21   Downpour Interactive   Oculus   NA
04/29/21   Uncosoft   Rollie Games   NA
04/29/21   Glu Mobile Inc.   Electronic Arts Inc.   3.89x
04/28/21   Traffic Puzzle   Huuuge Games Sp. Z 0. 0.   1.07x
04/23/21   Xombat apS   Trophy Games Development   NA
04/22/21   Climax Studios Ltd.   Keywords Studios PLC   NA
04/13/21   C4games Co., Ltd.   Nuverse Limited   NA
04/12/21   Big Time Gaming Pty Ltd   Evolution Gaming Group AB   13.60x
03/24/21   Gamesys Group PLC   Bally’s Corporation   2.85x
03/23/21   GeoComply   Minority sale to Blackstone Growth and Atairos   13.00x
01/25/21   Fantasy Sports Shark, LLC   Bally’s Corporation   NA
01/12/ 21   Vigtory, Inc.   Fubo TV Inc.   NA
01/07/21   EnLabs AB   Entain PLC   3.90x
12/31/20   Coolbet   GAN Limited   6.30x
12/07/20   Lottomatica S.p.A   Gamenet Group   1.12x
12/03/20   FanDuel Inc.   Flutter Entertainment PLC   12.20x
11/19/20   Bet Works Corp.   Bally’s Corporation   NA
09/30/20   William Hill PLC   Caesars Entertainment, Inc.   2.30x
09/17/20   BtoBet Limited   Aspire Global PLC   5.25x
06/24/20   NetEnt AB   Evolution Gaming Group AB   11.70x
10/22/19   UMG Media Ltd.   Torque Esports Corp.   2.80x
10/02/19   The Stars Group Inc.   Flutter Entertainment PLC   4.40x
09/05/19   Red Tiger Gaming Limited   NetEnt AB   NA
07/08/19   Greek Organization of Football Prognostics S. A.   SAZKA Group a.s.   5.60x
05/31/19   Stride Gaming PLC   The Rank Group PLC   1.20x
02/01/19   Adjarabet (Operating brand of Atlas LLC)   Paddy Power Betfair PLC   3.10x
12/18/18   Cherry AB   Bridgepoint Partners   3.60x
11/22/18   Neds International   Entain PLC   NA
10/31/18   Mr Green & Co AB   William Hill PLC   1.40x
08/26/21   Don Best Sports Corporation   Scientific Games Corporation   NA
07/24/18   Gold Bet SRL   Gamenet S.p.a   NA
05/23/18   FanDuel Inc.   Flutter Entertainment PLC   1.27x
04/27/18   Cirsa Gaming Corporation   The Blackstone Group L.P.   1.50x
04/21/18   Sky Betting and Gaming   The Stars Group   5.40x

 

 

NA refers to “Not Available”

NM refers to “Not Meaningful”

 

-38-
 

 

Taking into account the results of the selected transactions analysis, B. Riley applied a selected multiple range of 0.75x to 1.25x to GAN’s revenue for the last 12 months for the quarter ending September 30, 2023. The selected transactions analysis indicated an implied value reference range per ordinary share of $1.54 to $2.92, as compared to the merger consideration of $1.97 per ordinary share in the merger pursuant to the merger agreement.

 

Selected Companies Analysis. B. Riley reviewed certain financial data for selected companies with publicly traded equity securities that B. Riley deemed relevant. The financial data reviewed included enterprise value as of November 3, 2023, as a multiple of adjusted EBITDA for the year ending December 31, 2025, or “2025E Adjusted EBITDA.”

 

The selected companies and corresponding multiples were:

 

   

Enterprise Value /

2025E Adj.
EBITDA

LATAM and Euro-Centric B2C Operators    
Entain Plc   7.4x
Super Group (SGHC) Limited   6.4x
Kindred Group plc   4.8x
Betsson AB   3.8x
888 Holdings plc   4.4x
Codere Online Luxembourg, S.A.   NA
     
Media Services, Affiliates and Customer Acquisition    
Better Collective A/S   9.5x
Gambling.com Group Limited   8.4x
Gaming Innovation Group Inc.   4.3x
Catena Media plc   NA
Raketech Group Holding PLC   2.0x
Enthusiast Gaming Holdings Inc.   5.1x
     
Free-to-Play / Social Gaming    
Playtika Holding Corp.   4.9x
Embracer Group AB   3.6x
DoubleDown Interactive Co., Ltd.   1.8x
PLAYSTUDIOS, Inc.   3.4x
     
Vertically Integrated US B2B / B2C Operators    
Flutter Entertainment plc   11.3x
DraftKings Inc.   19.8x
Bally’s Corporation   5.9x
Rush Street Interactive, Inc.   2.6x
     
B2B Vendors    
Evolution AB   10.3x
Aristocrat Leisure Limited   10.5x
International Game Technology PLC   5.8x
Sportradar Group AG   10.7x
Playtech plc   3.5x
Genius Sports Limited   10.0x
Everi Holdings Inc.   4.4x
Kambi Group plc   4.9x
Inspired Entertainment, Inc.   4.4x
Ainsworth Game Technology Limited   5.9x
Bragg Gaming Group Inc.   3.7x
Elys Game Technology, Corp.   NA
     
US-Centric Esports    
Motorsport Games Inc   NM
Esports Entertainment Group, Inc.   NA

 

 

“NA” refers to not available.

“NM” refers to not meaningful.

 

-39-
 

 

Taking into account the results of the selected companies analysis, B. Riley applied a selected multiple range of 5.0x to 7.0x to GAN’s estimated revenue for the fiscal year ending December 31, 2025 under both the Base Case Projections and the Downside Case Projections. The selected companies analysis indicated an implied value reference range per ordinary share of $0.80 to $3.08, as compared to the merger consideration of $1.97 per ordinary share in the merger pursuant to the merger agreement.

 

Other Matters

 

B. Riley acted as financial advisor to the special committee in connection with the merger and is entitled to a transaction fee based on the value of the transaction, which fee is currently estimated to be approximately $2.5 million, and which is contingent upon the consummation of the merger. B. Riley also became entitled to a fee of $750,000 upon the rendering of its opinion to the special committee, of which $250,000 is creditable against the transaction fee. In addition, GAN has agreed to indemnify B. Riley and certain related parties for certain liabilities arising out of or related to its engagement and to reimburse B. Riley for certain expenses incurred in connection with its engagement. The GAN board of directors engaged B. Riley based on B. Riley’s knowledge of GAN and its industry, as well as its experience working with GAN and its management. B. Riley is regularly engaged to render financial opinions in connection with mergers, acquisitions, divestitures, leveraged buyouts, and for other purposes.

 

B. Riley is a full-service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, B. Riley and its affiliates may acquire, hold or sell, for its and its affiliates’ own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of GAN, SSC and their respective affiliates. B. Riley and its affiliates have in the past provided, and may in the future provide, investment banking and other financial services to GAN, SSC and their respective affiliates, for which B. Riley and its affiliates have received, or would expect to receive, compensation, including, during the past two years, having acted as financial advisor to GAN in connection with the refinancing of certain of its indebtedness for which B. Riley received aggregate compensation of approximately $2.5 million. In addition, as the special committee and the GAN board of directors were aware, B. Riley was retained by an affiliate of the former Chief Executive Officer of GAN in May 2022 in connection with a potential transaction involving GAN (which engagement was terminated without a transaction being consummated or compensation being received). B. Riley has adopted policies and procedures designed to preserve the independence of its research and credit analysts whose views may differ from those of the members of the team of investment banking professionals advising GAN.

 

Certain GAN Prospective Financial Information

 

As part of its consideration of strategic alternatives, GAN management prepared certain non-public financial projections for fiscal years 2023 through 2026. A set of financial projections, reflecting GAN management’s operating expectations, was in the virtual data room for the transaction and was made available to SEGA SAMMY HOLDINGS and B. Riley. Those projections were updated from time to time during the due diligence process and the last version was made available to SEGA SAMMY HOLDINGS and B. Riley on September 28, 2023 (which we refer to as the “VDR Projections”).

 

In connection with the evaluation of the merger by the special committee and the GAN board of directors in November 2023, GAN’s management prepared a revised set of financial projections for fiscal years 2023 through 2026 (which we refer to as the “Base Case Projections”). The VDR Projections differed from the Base Case Projections in the following ways: (a) the VDR Projections assumed GAN would generate revenue from regulated gaming in the State of California in 2025 and 2026, whereas, based on the then state of regulatory conditions, GAN management eliminated any such revenue in the Base Case Projections; (b) the VDR Projections assumed GAN would renegotiate the revenue sharing percentage under one of its more significant commercial contracts in a manner favorable to GAN, whereas the Base Case Projections eliminated that assumption and instead reflect anticipated revenue to GAN from that contract for the expected term of the contract based on the revenue sharing percentage in effect in November 2023; and (c) the VDR Projections included certain one-time cash payments to GAN in the calculation of adjusted EBITDA for 2023, whereas the Base Case Projections eliminated such one-time cash payments. GAN management also prepared financial projections for an alternate scenario which included adjustments from the Base Case Projections to address the potential impact that a 2024 adverse regulatory change in Chile, a significant market for GAN’s B2C business, would have on GAN’s operations in that market (which refer to as the “Downside Case Projections”, and together with the VDR Projections and the Base Case Projections, the “Projections”). The GAN board of directors and B. Riley were provided with the Base Case Projections and the Downside Case Projections. B. Riley was authorized and directed to use and rely upon the Base Case Projections and the Downside Case Projections for purposes of its financial analyses and opinion to the GAN special committee.

 

GAN does not as a matter of course make public projections as to future performance or earnings, in part because of the significant volatility of its operations. The Projections were not prepared with a view toward public disclosure or for the purpose of providing earnings guidance. Neither GAN’s independent auditors, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the Projections, nor have they expressed any opinion or any other form of assurance with respect thereto. The Projections were not prepared in compliance with generally accepted accounting principles in the United States (which we refer to as “GAAP”), SEC’s published guidelines regarding projections, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Except as required by law, GAN does not intend to update the Projections or to make other projections public in the future. The following summary of the Projections is intended to give the GAN shareholders access to certain nonpublic information provided to SEGA SAMMY HOLDINGS, the GAN board of directors and B. Riley.

 

The Projections were prepared by GAN’s management in good faith and on a reasonable basis based on the best information available to GAN’s management at the time of their preparation. However, the economic and business environments can and do change quickly, which add a significant level of unpredictability and execution risk. The Projections are not actual results. It is expected that differences between actual results and results contained in or implied by the Projections will occur, and actual results may be materially greater or less than those contained in or implied by the Projections. The Projections constitute forward-looking information and are subject to risks and uncertainties, including the various risks set forth in the sections of this proxy statement titled “Cautionary Statements Concerning Forward-Looking Information” and in GAN’s annual report on Form 10-K for the fiscal year ended December 31, 2022 and other documents GAN files or furnishes to the SEC. You are cautioned not to place undue reliance on the Projections.

 

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While presented with numeric specificity, the Projections reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to GAN’s business, all of which are inherently uncertain, difficult to predict and many of which are beyond GAN’s control. The Projections are subjective in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. While the Projections represent three scenarios, there is a wide range of potential outcomes for GAN’s future business operations. The Projections cover multiple years and such information by its nature becomes less reliable with each successive year. Furthermore, the Projections do not take into account any circumstances or events occurring after the date they were prepared.

 

The information about the Projections set forth below does not give effect to the merger and none of the Projections and extrapolations take into account the effect of any failure of the merger to be consummated. If the merger is not consummated, GAN may not be able to achieve any of the results contained in or implied by the Projections. There can be no assurance that the Projections, or the assumptions underlying them, will be realized. Accordingly, readers of this proxy statement are cautioned not to place undue reliance on the Projections.

 

The following is a summary of the VDR Projections (expressed in millions of U.S. dollars), which were provided or made available to the GAN board of directors, SEGA SAMMY HOLDINGS and B. Riley:

 

    2023E     2024E     2025E     2026E  
Total Revenue     148.1       194.5       190.5       222.5  
Total Cost of Revenues     39.9       42.9       51.4       57.9  
Gross Profit     108.2       151.6       139.1       164.6  
Total Operating Expenses     125.0       105.4       109.2       120.6  
Total Other Income (Expense), net     (0.9 )     -       -       -  
Total Interest Expense     4.9       4.4       4.3       4.1  
Income Before Taxes     (20.7 )     41.7       25.6       39.9  
Provision for Taxes     1.2       9.2       5.6       8,8  
Net Income     (22.0 )     32.5       20.0       31.1  
                                 
Adjusted EBITDA     7.4       52.8       35.8       50.3  

 

The following is a summary of the Base Case Projections (expressed in millions of U.S. dollars), which were provided to the GAN board of directors, the special committee and B. Riley:

 

    2023E     2024E     2025E     2026E  
Total Revenue     138.8       177.9       184.0       204.2  
Total Cost of Revenues     39.9       42.9       51.4       57.9  
Gross Profit     98.9       135.0       132.7       146.2  
Total Operating Expenses     125.0       116.1       119.9       131.5  
Total Other Income (Expense), net     (0.9 )     -       -       -  
Total Interest Expense     4.9       4.4       4.3       4.1  
Income Before Taxes     (30.0 )     14.5       8.5       10.7  
Provision for Taxes     (0.8 )     3.2       1.9       2.3  
Net Income     (29.2 )     11.3       6.6       8.3  
                                 
Adjusted EBITDA     (1.9 )     32.6       25.6       28.0  

 

The following is a summary of the Downside Case Projections (expressed in millions of U.S. dollars), which were provided to the GAN board of directors, the special committee and B. Riley:

 

    2023E     2024E     2025E     2026E  
Total Revenue     138.8       168.3       169.7       182.9  
Total Cost of Revenues     39.9       40.8       49.3       55.9  
Gross Profit     98.9       127.5       120.3       127.0  
Total Operating Expenses     125.0       116.1       119.9       131.4  
Total Other Income (Expense), net     (0.9 )     -       -       -  
Total Interest Expense     4.9       4.4       4.3       4.1  
Income Before Taxes     (30.0 )     7.0       (3.9 )     (8.5 )
Provision for Taxes     (0.8 )     1.5       (0.8 )     (1.9 )
Net Income     (29.2 )     5.4       (3.0 )     (6.6 )
                                 
Adjusted EBITDA     (1.9 )     25.0       13.3       8.7  

 

EBITDA and adjusted EBITDA are considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used in the Projections may not be comparable to similarly titled amounts used by other companies. EBITDA is calculated as net income (earnings), plus interest, taxes, depreciation and amortization. Adjusted EBITDA includes, among other things, addbacks of amounts for one-time costs and stock-based compensation.

 

You should not regard the inclusion of the Projections in this proxy statement as an indication that GAN or any of its affiliates, advisors or other representatives considered or consider the Projections to be necessarily predictive of actual future events. None of GAN or any of its affiliates, advisors or other representatives has made or makes any representations regarding the ultimate performance of GAN compared to the information contained in or implied by the Projections. GAN made no representation to SEGA SAMMY HOLDINGS in the merger agreement or otherwise, concerning the Projections. The Projections are not being included in this proxy statement to influence a shareholder’s decision regarding how to vote on any given proposal, but because the Projections were provided to the GAN board of directors (and the Base Case Projections and Downside Case Projections were provided to the special committee) and were provided to B. Riley, which was authorized and directed to use the Base Case Projections and the Downside Case Projections, in its financial analyses and opinion to the GAN special committee, and because the VDR Projections were made available to SEGA SAMMY HOLDINGS.

 

No Financing Condition

 

Completion of the merger is not subject to any financing condition. The total amount of funds required to complete the merger and related transactions and pay related fees and expenses are estimated to be approximately $107.6 million. SSC expects that it will be able to fund all payments required of it to complete the merger and related transactions entirely from its cash on hand.

 

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Effective Time of Merger

 

The closing is expected to take place by the fourth quarter of 2024, although there can be no assurance that the parties will be able to do so. The closing will occur as soon as reasonably practicable (but in any event no later than the fifth business day) following the satisfaction or, to the extent permitted by applicable law, waiver of all the closing conditions set forth in the merger agreement (described in the section of this proxy statement titled “The Merger Agreement — Closing; Effective Time”) (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or, to the extent permitted by applicable law, waiver of those conditions) or such other date and time as GAN and SSC may agree in writing.

 

The merger will become effective upon the issuance of the certificate of merger by the Bermuda Registrar of Companies and at the time and date shown on such certificate of merger.

 

Interests of GAN’s Directors and Executive Officers in the Merger

 

GAN’s directors and executive officers may have interests in the merger that are different from or in addition to those of GAN shareholders generally. The GAN board of directors was aware of and considered these interests, among other matters, in evaluating the merger agreement, in approving the merger agreement and the statutory merger agreement and the transactions contemplated by the merger agreement and the statutory merger agreement, including the merger, and in recommending that GAN shareholders approve the merger proposal.

 

Treatment of Outstanding Equity Awards

 

Pursuant to the terms of the merger agreement and the statutory merger agreement, at the effective time, as a result of the merger (and without any action on the part of SSC, Merger Sub, GAN or any holder of any outstanding option, restricted share unit, or restricted share award, as applicable):

 

each then outstanding option to acquire ordinary shares (whether vested or unvested) will become fully vested and will be automatically canceled in exchange for the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to (a) the product of (i) the excess, if any, of $1.97 over the per share exercise price of the option and (ii) the number of ordinary shares issuable upon the exercise in full of such option, less (b) any applicable tax withholding; any such option with an exercise price per share equal to or greater than $1.97 will be canceled and terminated for no consideration as of immediately prior to the effective time;

 

each then outstanding restricted share unit (whether vested or unvested) will become fully vested and will be automatically canceled in exchange for the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to (a) the product of (i) $1.97 and (ii) the number of ordinary shares subject to such restricted share unit, less (b) any applicable tax withholding; and

 

● each then outstanding restricted share award (whether vested or unvested) will become fully vested and non-forfeitable and will be converted into the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to $1.97 per share subject to such restricted share award, less any applicable tax withholding.

 

Summary of Outstanding GAN Equity Awards

 

Assuming for this purpose that the merger was completed on December 31, 2023, the table below sets forth the number of vested and unvested equity awards held by GAN’s executive officers and directors and the value that they can expect to receive for such equity awards at the effective time based on the per share merger consideration equal to $1.97. With respect to stock options, the table below includes only stock options that have a per share exercise price less than $1.97. Depending on when the merger is completed, certain awards that are now unvested and included in the table below may vest or be forfeited pursuant to their terms, independent of the merger.

 

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Vested

Shares

  

Unvested Restricted

Shares

  

Unvested Restricted

Share Units

  

Vested

Stock Options

  

Unvested

Stock Options

 
Name  Number
(#)
   Value
($)
   Number
(#)
   Value
($)
   Number
(#)
   Value
($)
   Number
(#)
   Value
($)
   Number
(#)
   Value
($)
 
Named Executive Officers(1)                                                  
Dermot S. Smurfit, Former CEO                                        
Seamus McGill, Interim Chief Executive Officer and a Director   68,228   $134,409    275,000   $541,750    32,500   $64,025    50,000   $45,495         
Sylvia Tiscareño, Chief Legal Officer   73,022   $143,853            293,747   $578,682                 
Brian Chang, Interim Chief Financial Officer   12,136   $23,908            199,450   $392,917                 
3 Other Executive Officers(2)   16,522   $32,548            138,746   $273,330    190,702   $269,754    329,037   $644,913 
4 Non-Employee Directors(3)   146,325   $288,260            97,500   $192,075       $         

 

(1) Mr. Smurfit resigned on September 25, 2023.

 

(2) Includes (i) Jan Roos, Chief Technology Officer, (ii) Giuseppe Gardali, President of B2B operations and (iii) Endre Nesset, President of B2C operations.

 

(3) Includes (i) Susan Bracey, (ii) David Goldberg, (iii) Eric Green, and (iv) David D. Ross.

 

Grants of Restricted Stock Awards in 2024

 

In 2024 and before the closing, the compensation committee of the GAN board of directors expects to grant restricted stock awards to GAN’s executive officers. As of the date of this proxy statement, the following table sets forth the estimated restricted stock awards that are expected to be granted to GAN’s executive officers in the first quarter of 2024, subject to approval by the compensation committee of the GAN board of directors. As is the case with currently outstanding restricted share awards, each restricted share award granted in 2024 that is outstanding at the effective time (whether vested or unvested) will, as a result of the merger (and without any action on the part of SSC, Merger Sub, GAN or any holder of any restricted share award), become fully vested and non-forfeitable and will be converted into the right of the holder thereof to receive a single lump sum cash payment, without interest, equal to $1.97 per share subject to such restricted share award, less any applicable tax withholding.

 

Executive Officer 

# of Ordinary Shares Underlying

Restricted Stock Award

  

Value of

Restricted Stock Award

 
Mr. Chang   62,960   $123,499 
Mr. Gardali   39,904   $78,611 
Mr. Nesset   83,430   $164,357 
Mr. McGill        
Mr. Roos   56,714   $111,727 
Ms. Tiscareño   99,365   $195,749 

 

Executive Agreements

 

GAN entered into employment agreements with each of Messrs. McGill, Chang, Gardali, Nesset, Roos and Ms. Tiscareño that specify certain payments and benefits to be provided by GAN to each of them under various circumstances, including, among other things, upon a qualifying involuntary termination of employment and/or the occurrence of a change in control of GAN. For purposes of their employment agreements, the consummation of the merger will constitute a change in control of GAN. The employment agreements and the benefits provided to these executive officers under their respective employment agreement were approved by the GAN board of directors and/or the compensation committee of the GAN board of directors and were determined to be reasonable and necessary in order to hire and retain these individuals. The following is a brief description of the executive officer employment agreements.

 

McGill Employment Agreement

 

On September 26, 2023, GAN entered into an employment agreement with Mr. McGill, pursuant to which Mr. McGill serves as Interim Chief Executive Officer. Under the terms of his employment agreement, Mr. McGill is entitled to, among other benefits: an annual base salary of $500,000; an annual bonus of up to 100% of his base salary for the applicable bonus year (payable in cash or vested stock); an initial equity award of 275,000 ordinary shares, with 25% of such award vesting on the first anniversary of the grant date and 25% of such award vesting on each anniversary thereafter, in each case, subject to continued service; expense reimbursement; and participate in GAN’s employee benefit plans, practices and programs that GAN makes available to its employees.