Criminal charges filed in Austria against former Vice-Chancellor Heinz-Christian Strache and two executives of the gambling giant Novomatic – founder Johann Graf and former CEO of Novomatic/Ainsworth Harald Neumann – have cast a shadow over a corporate saga between the two companies on the other side of the world. Austrian prosecutors have alleged that Strache accepted benefits in exchange for influencing his official actions, while Graf and Neumann allegedly offered these benefits to gain political influence.
The centrepiece of the case involves the appointment of Peter Sidlo, a politically connected candidate, to the management board of Casinos Austria. Prosecutors claim that the appointment was politically motivated rather than merit-based, with Strache supposedly signalling he could support Novomatic’s interests in gambling policy and licensing decisions. If convicted, the individuals could face up to two years in prison, while Novomatic itself could receive a corporate fine under Austria’s liability laws.
While these allegations are centred in Austria, the fallout may extend far beyond, raising questions about the recent collapse of Novomatic’s takeover of Australian gaming company supplier Ainsworth Game Technology. Even though the charges have no formal connection to the Australian matter, the timing and nature of the allegations have amplified concerns among investors, regulators and corporate governance observers worldwide.
‘Allegations can ripple across international markets’
Matt Davey, president at Tekkorp Capital, comments on the significance of the charges: “Allegations of this nature, even outside Australia, can ripple across international markets. Shareholders and regulators alike will be scrutinising any connection to corporate governance failures, including failed transactions like the Ainsworth takeover.”
Prash Patel, industry veteran and CEO at games studio Phoenix Rising, says of the potential impact on the Ainsworth deal: “It’s difficult to establish a direct causal link, but the timing of these charges and the increased scrutiny on Novomatic could have reinforced existing concerns among minority shareholders. Investors may have perceived elevated regulatory and reputational risks, which can dampen willingness to accept an offer, even at a fair price.”
Novomatic, in a statement released on 27 February, rejected the allegations outright, describing them as “unfounded” and emphasising its intent to cooperate fully with Austrian authorities. Yet in the tightly regulated world of international gaming, perception can weigh as heavily, particularly when a company is seeking to expand or consolidate ownership across borders. The company was approached for further comment, but declined to contribute.
The failed takeover
Novomatic’s interest in Ainsworth was far from opportunistic. By 2025, the Austrian firm already controlled nearly 60% of Ainsworth shares, and full ownership promised strategic advantages. Ainsworth, an Australian developer and manufacturer of electronic gaming machines (EGMs) and digital gaming content, earns roughly 80% of its revenue internationally, with North America as a critical market. For Novomatic, acquiring the remainder of Ainsworth was not merely about ownership; it was about technological integration, market access and operational synergy.
In August 2025, Novomatic launched an all-cash AU$1 per share takeover offer alongside a scheme of arrangement – the legal method used for corporate takeovers or restructurings that requires approval from both shareholders and a court. The bid was designed to secure broad shareholder approval, including the minimum requirement for delisting and potential compulsory acquisition (which means a buyer who already owns almost all the shares of a company can force the remaining shareholders to sell their shares.) under Australian takeover rules. Yet the plan faced immediate obstacles.
Minority investors, particularly those aligned with the Ainsworth family, controlled sufficient shares to block the scheme. On 26 August, Ainsworth announced that proxy forms indicated the necessary approval was unlikely. The scheme meeting scheduled for 29 August was cancelled and the Supreme Court of New South Wales formalised its termination the next day. Although a replacement off-market offer opened on 3 September, the underlying shareholder resistance remained a formidable barrier.
“Even before these allegations emerged, the structural hurdles for this transaction were significant. Minority shareholders, particularly those aligned with the Ainsworth family, held sufficient stakes to block the scheme. Combine that with reputational concerns now surrounding Novomatic and it’s not surprising the bid stalled,” says Matt Davey.
Minority shareholders yield their power
Australia’s corporate framework affords minority shareholders substantial protection and, in Ainsworth’s case, this protection proved decisive. The Independent Board Committee (IBC), responsible for evaluating the bid, relied on LEA’s Independent Expert’s Report, which assessed Ainsworth’s value between AU$0.93 and AU$1.07 per share on a 100% controlling interest basis.
The AU$1.00 offer fell comfortably within this range, making the bid fair by financial measures. But fairness isn’t enough to win approval, especially if there are concerns about management or the company’s reputation.
Patel explains: “Minority shareholders in Australia enjoy strong protections. When there’s both a perceived governance risk and a controlling shareholder seeking full acquisition, resistance can become entrenched. The recent Austrian allegations likely compounded an already cautious investor stance.”
Even for investors not directly aligned with the Ainsworth family, the offer gave shareholders a chance to sell in a market where shares don’t trade often. Still, many decided to keep their shares, possibly factoring in both the ongoing investigation abroad and the implications it could have for the parent company’s governance standards.
A deal that made sense
The strategic case for the acquisition was clear: Ainsworth’s EGMs, casino content and digital games complemented Novomatic’s existing portfolio, particularly in North America. Full ownership would have allowed for streamlined operations, integrated technology and the capture of potential synergies.
“From a strategic standpoint, the deal made sense: consolidating technology, leveraging cross-market synergies and gaining operational control in North America. But strategy alone isn’t enough when shareholder sentiment and regulatory issues collide,” Davey elaborates.
Andrew Klebanow of Klebanow Consulting, who provides advisory services to casino clients throughout North America and Asia, highlights Novomatic’s international appeal and technological synergy. “The acquisition of Ainsworth would have permitted Novomatic access to Ainsworth’s proprietary HHR game technology, while introducing Novomatic’s multi-game platform to HHR jurisdictions and in markets that are legally constrained in the number of gaming devices they can bring onto a casino floor. It would have been a good synergy.”
He also points out the fairness of the offer: “The independent expert report valued Ainsworth between AU$0.93 and AU$1.07 per share. The AU$1.00 offer fell within this range, meaning it was fair, but in situations like this, perception and trust can override pure financial logic.”
Ainsworth‘s measured approach
Under Australian rules, achieving 75% approval for a deal allows a company to delist, while reaching 90% triggers compulsory acquisition. Minority shareholders who withhold consent can therefore maintain leverage even in situations where the offer is fair and strategically sensible.
In Ainsworth’s case, it seems this structural safeguard intersected with a heightened perception risk arising from the Austrian corruption allegations, creating an environment in which the offer could – and did – fail, according to Matt Davey.
“Minority blocks are a common feature in Australia, and they matter more when the acquirer faces reputational or regulatory pressures. In this case, the allegations abroad amplified an already risky acquisition environment,” he notes.
Furthermore, Ainsworth’s history underscores a cautious, measured approach to expansion. Strategic reviews and exploration of alternatives – including potential US listings – were suspended between 2023 and 2024, as the company sought to maximise shareholder value through product development and selective partnerships.
Will there be a new bid for Ainsworth?
Whether Novomatic will attempt a revised bid for Ainsworth remains uncertain. Any renewed offer would likely need to address minority shareholder concerns directly and offer a premium to compensate for perceived governance and regulatory risks.
The Austrian allegations, while unproven, could influence market confidence and shareholder behaviour for the foreseeable future. Summarising the challenge Davey adds: “Novomatic faces a delicate balancing act. They need to reassure shareholders, manage global reputational risks and ensure the price adequately reflects both market value and the psychological impact of governance concerns.”
While Patel adds: “It’s unlikely that a revised bid would emerge quickly. The company may wait for the legal situation in Austria to clarify, as ongoing investigations could significantly influence both market confidence and shareholder behaviour in Australia.”
As the Austrian investigation unfolds, and with Novomatic’s strategic ambitions seemingly still intact, the ultimate fate of a full Ainsworth acquisition remains unresolved. As it stands, the saga is a reminder that in an era of globalised capital, corporate missteps – even outside a company’s primary jurisdiction – will echo across continents, influencing deals, investor behaviour and market confidence.
Original article: https://igamingbusiness.com/strategy/ma/austrian-corruption-charge-soured-novomatics-ainsworth-takeover/
