Does Aristocrat's $1.8 billion acquisition make the ASX 200 stock a buy?

This tech share has just announced a major acquisition.

| More on:
a group of three young men sit on a sofa in a home environment with a bowl of popcorn and beer bottls in front of them cheering on one of their group as he looks excitedly at his phone as though he's just had some success on an online gambling app.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On Monday, Aristocrat Leisure Limited (ASX: ALL) shares started the week with a small gain.

Investors were bidding the ASX 200 gaming technology stock higher after it announced a major acquisition.

What is Aristocrat acquiring NeoGames?

According to the release, Aristocrat has agreed to acquire NeoGames in a deal valued at $1.8 billion on an enterprise value.

Management believes the acquisition delivers on Aristocrat's online real money gaming (RMG) strategy and expects it to accelerate its growth.

In addition, the deal is forecast to be earnings per share accretive in the first full year of ownership.

Positively, the acquisition is recommended by the NeoGames Board and shareholders representing ~61% of its outstanding shares have agreed to vote in favour of the transaction.

Outside this, another positive is that management has revealed that its on-market share buy-back program has been increased by up to $500 million.

Does this make Aristocrat shares a buy?

Goldman Sachs has been running the rule over the acquisition and likes what it sees. It said:

We had previously called out the iSlots market as the key opportunity that can be targeted by the Anaxi (RMG) business. This proposed acquisition expands this opportunity to be more global and inclusive of the entire RMG universe including iLottery and OSB.

It then adds:

Our first thoughts are that the acquisition offers an exciting growth option which expands the addressable opportunity for RMG. While the transaction is at a 16.5x 12m trailing EV/EBITDA multiple, on an EV/Revenue basis it is at c. 0.2x (based on mid-point of NeoGames CY23 revenue guidance of US$235-255mn) and the growth opportunity remains strong. Overall, the acquisition in itself does not come as a surprise as management has previously noted the key gaps they are likely to target through inorganic opportunities in the RMG space.

Goldman currently has a buy rating and $45.70 price target on the Aristocrat shares. This implies potential upside of almost 16% for investors.

Should you invest $1,000 in Aristocrat Leisure Limited right now?

Before you buy Aristocrat Leisure Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Aristocrat Leisure Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 7 February 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Leading broker upgrades Pro Medicus shares to buy rating

Analysts at Bell Potter think this tech stock is a top buy right now.

Read more »

A woman holds her hand out under a graphic hologram image of a human brain with brightly lit segments and section points.
AI Stocks

$8,000 invested in Brainchip shares five months ago is now worth…

Brainchip shares have delivered some sizzling gains since September with plenty of volatility!

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Earnings Results

Pro Medicus share price storms higher on record-breaking results

Investors are cheering on this tech company's latest results.

Read more »

A young boy wearing a hat, sunnies and striped singlet looks fierce and flexes his arm in victory.
Small Cap Shares

The ASX small-cap stock trading at 'half of the earnings multiple of industry leaders'

A leading fund manager sees a lot of untapped value for this soaring ASX small-cap stock.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Earnings Results

Guess which ASX All Ords stock just jumped 20%

Why are investors buying this tech stock on Wednesday? Let's find out.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
Technology Shares

3 reasons to buy this resurgent ASX 200 tech stock today

A leading investment expert expects more growth ahead for this surging ASX 200 tech stock.

Read more »

Man controlling a drone in the sky, symbolising DroneShield share price.
Technology Shares

Why the Trump presidency looks bearish for DroneShield shares

This investing expert believes the Donald Trump presidency bodes ill for DroneShield shares.

Read more »

ASX 200 investor looking frustrated at falling share price whilst sitting at desk
Earnings Results

Why is this $15 billion ASX 200 stock falling so hard today?

The ASX 200 stock is under heavy selling pressure on Monday.

Read more »