GAN, a prominent player in the iGaming industry, has recently received approval from its shareholders for the acquisition of its assets by Sega Sammy, a Japanese gaming giant. This decision however has not been without controversy.

Merger proposal

In November 2023, GAN announced a $107.6 million acquisition agreement with Sega Sammy, which valued the company at $1.97 per share. During a shareholder meeting held on 13 February 2024, over 95 percent of votes cast were in favour of the merger agreement. Approximately 51 percent of GAN’s issued ordinary shares were represented at the meeting. The shareholders also gave non-binding advisory approval for the compensation that may be paid to GAN’s executive officers in connection with the merger. The merger’s closure is expected to occur in late 2024 or early 2025, subject to regulatory approval and other closing conditions. If completed, each GAN ordinary share will be converted into the right to receive $1.97 in cash per share, and GAN will become a wholly-owned subsidiary of Sega Sammy.

Class action lawsuit

The approval of the merger was followed by a class-action lawsuit filed by Joseph Zappia, a prominent GAN shareholder. Zappia alleged that GAN misled investors through its proxy statement preceding the shareholder meeting. The lawsuit outlined several instances where GAN purportedly failed to disclose conflicts of interest and omitted material information. One of the grievances detailed in the complaint was the allegation that the initial offer was reduced from $2.51 per share to the final $1.97 per share due to concerns surrounding GAN’s business landscape, including the departure of one of GAN’s major B2B clients, WynnBet. GAN denied these allegations, asserting its adherence to legal standards and making additional disclosures to mitigate potential legal ramifications. The lawsuit also questioned the transparency and composition of the committees involved in approving the acquisition, raising concerns about the secretive nature of the Financing Special Committee and the Merger Special Committee. Zappia’s legal team argued that GAN shareholders suffered “irreparable harm” due to the alleged material omissions and demanded a trial by jury to seek appropriate relief. The exact amount was not specified in the complaint. As the merger progresses, GAN Limited (GAN) is currently trading at $1.57, a 1.29 percent increase.

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