The acquisition of assets from Amaya Gaming is a solid move for NYX Gaming (NYX Gaming Stock Quote, Chart, News: TSXV:NYX), says Cantor Fitzgerald Canada analyst Ralph Garcea.

This morning, NYX announced it had entered into a share purchase agreement to acquire the former Chartwell Technology and CryptoLogic assets from Amaya Gaming for $150-million in cash.

“We are excited about this acquisition and partnership, which will provide NYX with additional leading gaming content and access to what we believe will be one of the world’s fastest-growing on-line casinos, said CEO Matt Davey. “As part of our agreement to acquire Ongame we negotiated a right of first offer to purchase the CryptoLogic and Chartwell business as we saw it as highly strategic to our existing business. This transaction completes the strategy we embarked upon with Ongame. We believe there to be a substantial growth opportunity in the PokerStars and Full Tilt casino offering, which we anticipate benefiting from as part of our licensing agreement with Amaya. We have substantial equity and debt financing options available to us to fund the acquisition.”

Garcea says this deal is a strategic one for NYX and presents a host of revenue synergies going forward.

“NYX is acquiring some of the world’s leading gaming content (~300+ games), a real-money gaming platform, and 40+ customers (up from 100+ customers currently) that includes some of the world’s leading online casino providers,” said Garcea. “For 2014, the B2B Business generated ~$17.4M in revenue and EBITDA of ~($7.6M). Management expects substantial cost synergies of ~$7.0-9.0M (50%+ to be realized in the first 12 months). Note that at their peaks we estimate the B2B Business was doing ~$25M in revenue – which would essentially double NYX’s current business.”

Garcea notes that as part of the deal, NYX will enter into a six year preferred supplier agreement with Amaya that will see integration of some of the company’s casino gaming content in the PokerStars and Full Tilt branded casino websites.

In a research update to clients this morning, Garcea maintained his “Buy” rating and $7.00 one year target price on NYX, implying a return of 36.7% at the time of publication.

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