Late November and during December, the share price did rise from around 5 SEK to 9 SEK due to several aspects. Since then the share has falled back to around 6 SEK. Main reason to the rise in shareprice was probably that the company said it was doing a strategic review, including looking into the possibility to divest assets. GIG Games was closed and next in line would be to divest the B2C division or/and some media assets and reduce cost in the GIG Sports with a possible JV. In addition it looks like a lot of cost savings will be done going forward with a positive effect on the bottom line.

Share price 6 Sek looks like a good entry.

If one believe the reaction in share price from 5 to 9 SEK is somewhat representative for the share value and MC post divesting a division, logically then now should be a good entry. One could say that since we are closing in on the bond deadline in March, one should discount some for a default. That said, the strategic review and possible divesting process, was as far as I know, intiated 6 months ago, with the deadline in Mars in the backhead. Assets always have a price, and they have probably used the time to be sure they get a best possible marketprice. Since the bond deadline comes up early in March, and they highly probably want a buffer to that deadline, I feel pretty confident we will get some news, with a possible SPA (or LOI) around this, inside the next 6-7 trading days from now, before or on the Q4 report day.

Cost savings going forward.

Repaying all the bond will save ca 2 meur a year, closing of GIG games will save 3 meur a year, a reduced tech staff will (others than related to b2C), as I understand it, save around 1,5 meur a year and a gradually move to the new platform will save probably above 1meur a year. In addition will the Higroller payout be 1,75 meur a year for the next four years. Both the EBIT margin and the EPS will have an accelerating improvement, as the amortizations of the acquisitions will decrease rapidly during H1 2020. As we know, GIG has due to the Norwegian "Finanstilsynet", had a much more aggressive amor. than many of their competitors on these type of assets. This will now bear fruits, in terms of a positive impact on the EPS and EBIT from now on and gradually the next 2 quarters going forward (3 years amor. is ending)

What are the SOTP valuation for GIG assets? Its not easy to tell in today`s marked, but here are the average of Redeye and SEB verdict:

GIG B2C : 62 meur
GIG Media : 109,4 meur
GIG Core : 41,3 meur
GIG Sports : 3,9 meur
TOTAL: 216,6 MEUR

Net Debt is - 60 meur

A debt free GIG could then be valued at 156,6 meur ref Redeye and SEB. If you compare that to the marketcap today of 52 meur, GIG is only valued at 1/3.

We all know that there is a conglomerate discount in companies like GIG. That is Fair. What I think is interesting , is that we now are so close to possible divestments and still has this 1/3 valued MC to a debtfree SOTP. Even if we reduce the debtfree analyst predicted value from 156.6 to 100 meur, by reducing the valuation for Media and Core to get a buffer, we have a nearly 100% upside at todays levels.

What sorts of deals can be made?

Here I see particular one interesting type of deal, which can combine GIG B2C and GIG Sports. What is interesting is that GIG sports is one of only a few companies with a B2B sports service licence in USA. Their B2C divison also have licenses in a number of interesting countries including Germany, Spain and Croatia etc. A possible taker would than be a company that want to penetrate this and get a geographical footprint in this new growing markets, both B2C and possible sports B2B. You can say what you want about the GIG sports product (I would personally have done a reamp on the frontend to improve UX), but the licenses and structure they have set, with a couple of respectable clients, have value. A deal, which included that the B2C stayed on the core platform for a certain years and a joint venture/takeover of the sports division, could create the best synergies, both for the takers and for GIG.

Who is the possible takers?

That would be some with a room for it on the balance sheet and who would want to expand their geographical footprint. GVC has been interested in Scandinavian companies earlier and had at one point 15% ownershipan in Betit and an option to buy them before GIG did it. Willhill did buy MrGreen and infact MrGreen is already on GIG sports for some markets, and one could suspect they could expand their cooperation even more with a deal here. On paper they are perhaps the buyer that could create the best possible synergies.

I also see Betsson as a possible taker. They have said more than once that they search for possible M&A objects, they can expand their footprint into US and other new european contries. There is also a history between some of the biggest owners of GIG and CEO Pontus Lindwall (Betsafe was bought by Betsson and some of the biggest GIG owners worked in leading positions during the next year), so one must assume the negotiation climate is good.

There could of course also be other possible takers, but if I should try to guessimate the most possible ones, I would give Willhill 30%, Betsson 30%, GVC 10% and others 30%.

I expect some news inside the next 7 trading days (before or on the GIG Q4 report) regarding divestment(s). It could be interesting to note the respective q4 reporting days : Betsson ( 13 feb.), GIG (18 feb.) and Willhill (27 feb.)

Regarding the strategic review and the statement that has been made, you can read between the lines that both the B2C and probably a part of the media company is for sale. My view, which is supported by some colleagues in the industry, is that GIG will sell off the B2C now in february and do a JV with the sportsbook. What I believe will happen next, is that GIG will sell some of their media assets, but keep their Copenhagen paid marketing department. What we have left then later in 2020, is a company that will be a more pure service and SAAS datadriven company. A company that not only will focus on helping landbased/ media to go online, but also start focusing outside of igaming with their "GIG DATA" product.

I see a good r/r at this levels, since my view is that the MC should not be at a 1/3 of (estimated SOTP value - debt), this close to a highly possible divestment(s). They will cut cost and probably present a clean balancesheet in the near future. That said, to keep the momentum after this is done, they have to deliver. They have to show they can build shareholder value going forward, this to rebuild trust. By unlocking shareholder value with divestments, cut cost and focus more on CORE (values), I think they will get a good start rebuilding that trust.

I focus the most on my own startups theese days and SPEQTA , so I am sure others are more updated on GIG than me. Please fill in.

Disclaimer: I own GIG shares.