GTECH, IGT confirm acquisition talks
International casino and lottery supplier and operator GTECH confirmed last week that it is in negotiations to buy slot machine manufacturing giant International Game Technology.
GTECH S.p.A., the Italy-based conglomerate formed through the combination of Italian lottery operator Lottomatica, slot maker Spielo International and Rhode Island-based lottery supplier GTECH Corporation, issued a statement last week confirming that it has hired advisers to help negotiate a deal to buy IGT, the world’s largest slot manufacturer.
“This transaction could potentially involve the use of a mix of cash and equity as consideration,” the GTECH statement said.
IGT issued its own statement last week, confirming for the first time that the company is for sale.
“IGT regularly considers, and on occasion explores, a broad range of strategic alternatives,” the statement said, “including but not limited to business combinations, changes to our capital structure and adjustments to our portfolio of businesses, with the goal of maximizing shareholder value.
“The IGT Board of Directors and senior management are currently engaged in such an exploration, but no decisions have been made by the board regarding any particular alternative available to the company and there can be no assurances that any transaction or other strategic change will be entered into as a result of the current exploration of alternatives.
“IGT does not intend to discuss or disclose developments with respect to this general subject unless and until the board has approved a definitive course of action.”
Reuters, which originally reported that IGT was for sale in a story two weeks ago citing unnamed sources, reported last week that GTECH’s bid will not be alone. Billionaire Ron Perelman’s McAndrews & Forbes Holdings, a holding company with interests in a diverse range of companies including Scientific Games and Revlon, is bidding to buy IGT, according to the report.
Private equity firm Apollo Glob al Management, co-owner of Caesars entertainment, and buyout firm Carlyle Group LP are also reportedly planning to bid on the company. A source told Reuters that bids are expected on the slot-maker during the next few weeks.
IGT has reportedly hired Morgan Stanley to explore a sale. None of the parties identified as potential buyers of the slot-maker would comment for the Reuters report.
IGT controls around 47 percent of the worldwide slot machine market, and most recently branched out into the social gaming area with its purchase of Double Down Interactive, which owns the popular DoubleDown Casino on Facebook. IGT carries around $2.2 billion in debt.
GTECH is the world’s largest operator of lotteries, its subsidiary Lottomatica running the Italian lottery and several U.S. state lotteries. Its slot manufacturing arm, the former Spielo International, is a successful supplier of games in the Canadian market and in U.S. commercial casinos. That company previously bought the former Austrian slot-maker Atronic Group. Its market capitalization is around $4.6 billion.
The news of the buyout negotiations sent shares in IGT up nearly 11 percent the day of the announcement, giving it a market value of close to $4 billion. Shares in GTECH were down 0.6 percent.