The last Nevada Gaming Control Board meeting under Chairman Kirk Hendrick’s tenure began June 11 with a complex and lengthy regulatory review — and initial approval — of a corporate merger that could reshape the gaming supplier landscape.
Representatives from Apollo Global Management, International Game Technology and Everi Holdings went before the board to discuss Apollo’s $6.3 billion double acquisition of the two suppliers. This included numerous items related to ownership transfers, corporate protocols and compliance.
Nick Khin, who currently serves as president of IGT, also appeared for suitability approval as interim CEO of the new entity. Former Aristocrat Gaming CEO Hector Fernandez will assume the role later this year upon completion of a non-compete obligation.
The complex merger is still ongoing and will continue as Apollo navigates regulatory requirements in Nevada and elsewhere. But the state is the biggest in terms of influence and importance, as the new merged entity will be headquartered there. It was initially announced last July, but the hearing was the first time officials gave new details about the transaction.
Ultimately, the board approved all the items unanimously, a significant step for one of the biggest industry deals in recent history. The Nevada Gaming Commission will now make a final ruling at its meeting June 26.
Apollo is merging IGT’s gaming business with Everi’s gaming and financial technology business. The new entity will be taken private while retaining the IGT name. IGT’s sizable lottery business is being spun off into its own publicly traded company under a different brand.
Apollo partner Daniel Cohen went before the board to discuss the merger alongside attorney J. Brin Gibson, who also notably served as chairman of the NGCB prior to Hendrick. Cohen asserted that his firm’s “sole focus is really to drive long-term value creation,” citing the success of its previous investments in the space.
“Our goal long term is to become the operator’s supplier,” Cohen told the board. “So if you’re the Venetian or Caesars or anyone else, you can come to IGT for basically every one of your product needs, which will allow us to continue to invest in products and innovate with our customers to really create the next generation of what casino technology products will look like.”
IGT, one of the most storied brands in gaming, has seen two formidable competitors emerge over the years in Aristocrat and Light & Wonder. Aristocrat, by most accounts, has long held the top spot and L&W has been on a multi-year hot streak since divesting its own lottery and sports betting divisions. IGT could be considered third among them, with a widening gap.
Cohen acknowledged this at the hearing, saying that the combined business “has a margin profile that is significantly lower than our largest peers, which, you obviously know, are Light & Wonder and Aristocrat.” He said Apollo will “look to close that gap under our ownership.”
The Apollo deal is unusual in that two companies are being acquired and merged by a third party. But what makes it even more unusual is that IGT and Everi had already agreed to merge on their own some four months earlier.
Cohen said that Apollo had made multiple offers to IGT specifically starting in 2014. When the first merger was announced, the firm felt that it could better unlock quicker cash value for shareholders of both companies. And of course, it represented a rare opportunity to make a significant investment in a sector Apollo has experience in.
“We were able to come to a transaction that effectively just turned the stock consideration both shareholders were going to receive into cash,” Cohen explained. “So all the shareholders at both companies didn’t necessarily need to take the risks of execution and integrating the companies. … We will undertake that effort.”
