Scientific Games Corporation announced that it has submitted to the Board of Directors of SciPlay Corporation a proposal for Scientific Games to acquire the remaining 19% equity interest in SciPlay that it does not currently own in an all-stock transaction, following which SciPlay would become a wholly-owned subsidiary of Scientific Games.
This proposed transaction is a step forward on the strategy Scientific Games recently announced to become a content-led growth company with a particular focus on digital markets and unlock the value of the company’s products and technologies.
“SciPlay fits perfectly into Scientific Games’ focus on building engaging content and launching great games more fully cross-platform,” the company said in a press release. “Scientific Games expects the transaction to be immediately accretive to the value of the company’s shares, offering SciPlay shareholders a premium for their investment and the opportunity to participate in the upside potential of Scientific Games as it transforms its portfolio and executes on its strategy to drive long-term sustainable growth and significant shareholder value.”
“We believe a merger of SGMS and SciPlay will deliver significant operational, strategic and financial benefits and drive shareholder value in excess of what each company could generate on a standalone basis,” wrote Scientific Games CEO Barry Cottle in a letter to the company’s board of directors.
“Further, we believe SciPlay public shareholders will benefit from increased trading liquidity as a result of being part of a pro forma entity with a market capitalization of $7 billion (based on the closing share prices of SGMS and SciPlay on July 14, 2021) and a public float that would be approximately 18 times larger than SciPlay today.”
“The all-stock transaction would effectively value SciPlay’s minority piece at $430M (using Scientific Games’ closing stock price yesterday),” Truist Securities Director and Senior Equity Analyst Barry Jonas said in an investor note. “For comparison, in March of 2019 Scientific Games received IPO proceeds of $342 million for 18 percent of SciPlay ($30 million of which was used for fees).”
Jonas calculated SciPlay shareholders would receive 0.25 shares of Scientific Games common stock for each SciPlay Class A share owned, which equates to an enterprise value of $1.9 billion.