A US-based shareholder in Australian slot machine supplier Ainsworth Game Technology has accused the company of deliberately devaluing its own stocks, possibly in order to facilitate a full sale to its parent firm, Austrian giant Novomatic.
Speaking with the Australian Financial Review over the weekend, David Kanen of Kanen Wealth Management – which holds around 8 million Ainsworth shares, stated his belief that the business was “severely undervalued” after Ainsworth CEO Harald Neumann told investors a secondary listing in the United States was not an option.
“I believe our CEO talked the stock down,” Kanen said. “By limiting themselves to being in obscurity, solely on the Australian exchange … they’re missing a much bigger sized audience. Remaining in obscurity results in low volume, lower valuation and lack of price discovery, no US research coverage.”
According to the AFR report, Neumann claims a secondary listing would cost the company around AU$10 million but a number of shareholders, including Karen, dispute this – instead putting the cost at less than AU$2 million.
“It was a complete falsehood for him to say AU$7 million to AU$10 million,” Kanen said. ”I’ve been a patient shareholder for approximately three years. Harald knows US is a more liquid market with more investors that could potentially buy the stock.”
At the heart of the dispute is Ainsworth’s announcement last November that it had appointed Macquarie Capital as its financial advisor with a view to exploring “potential opportunities” that may enhance shareholder value. The appointment has led to rumors that a sale is imminent, with some suggesting Novomatic – which already holds a 52% stake in Ainsworth – is in prime position to complete a full takeover. Skeptics have also noted that Neumann was a senior executive at Novomatic for more than 11 years, including five-and-a-half years as CEO, before joining Ainsworth in 2021.
Karen said, “They’ve hired Macquarie to sell the company prior to realizing a fair value on the public market, thereby keeping [Ainsworth’s] price depressed. If there’s a deal from Novomatic that undervalues the company, absent an up-listing to the US, we would have to vote it down.”
Not all have bought into the theory, however, with Simon Mawhinney of Allan Gray – another investor – telling the AFR, “There have been so many companies that have listed on overseas stock markets expecting … to become the golden child on another stock market and it typically doesn’t happen.”
The AFR has named Oaktree, American Gaming Systems, Zitro Games and Merkur Group among other potential suitors for the Australian firm.
Ainsworth shares closed at $1.25 on Monday, up 10% over the past week but down from its 2024 high of $1.40.
