Slot machine maker AGS (NYSE:AGS) confirmed it received a $10 a portion takeover offer, which explains the stock’s 25.25% spring today, adding the call wasn’t accepted.

In a Form 8-K filing with the Securities and Exchange Commission (SEC), AGS doesn’t name from what fellowship it received the acquisition proposal, but it’s widely believed rival Inspired Entertainment (NASDAQ:INSE) is the suitor inwards question.

The Company’s Board of Directors and direction team are committed to acting inwards the best interests of all shareholders. Consistent with its fiducial duties and inwards audience with the Company’s financial and effectual advisors, the Company’s Board of Directors testament carefully look back any proposal received past the Company to regulate the course of action of activity that it believes is in the best interestingness of the Company and its shareholders,” according to the AGS regulatory document.

The gaming gimmick maker adds it is non keep company insurance to point out on market speculation and that no farther updates may be forthcoming unless required past regulators.

What’s Next for AGS

At $10 a portion out inward cash, the prospective vendee is valuing at $4, or 66% to a higher place AGS’s Aug. 11 closure price. Even with the massive, high volume rebound inwards the nominate today, the shares need to advance 33.1% to hit the bid price.

“This proposal was non recognised past the Company, although the Company remains inwards prelim discussions with such tertiary party,” said AGS in the SEC filing.

The Las Vegas-based companionship cautioned investors that there are no guarantees it will walk out a trade with the unidentified thirdly political party at the aforementioned toll or with another suer at a different damage tag.

While Inspired Entertainment didn’t point out on the matter and AGS didn’t distinguish the society past name, the former is seen as a believable suer owing to its firming equilibrate sheet and previous comments that it is evaluating consolidation opportunities.

Is $10 Enough? Maybe Not.

Simple math confirms a $10 per share offering for a troupe that traded at $6 simply unity day ago is compelling, but things aren’t that unsubdivided when it comes to AGS. The stock up traded at $32 in 2018 and its 52-week is $10.45.

Additionally, analysts are mostly constructive on AGS and the medium toll direct on the name — not necessarily a factor inward takeover talks — is $11.44. Indeed, the company has traits that are potential to live attractive to suitors.

Casino visitation trends are warm crossways the US, compelling operators to offer the one-armed bandit upgrade cycle, owing to the mellow margins offered by gaming machines. Specific to AGS, the company is adding securities industry share and derives 70% of its sales from revenant revenue streams.

It’s non in time crystalise that if AGS rejects the $10 a share entreat a higher offering will materialize.

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