GTECH to acquire IGT in $6.4bn deal
Two gaming giants will merge next year after GTECH agreed to pay $4.7bn in cash and assume $1.7bn in net debt
GTECH is to acquire Las Vegas-based slot machine maker International Game Technology (IGT) for approximately US$6.4bn (£3.7m), creating a global gaming giant with combined revenues of around $6bn.
The deal will see Italian lottery operator GTECH pay $4.7bn in cash and stock while it will also assume $1.7bn of IGT net debt. A new UK-headquartered holding company, referred to as NewCo, will be set up and listed on New York Stock Exchange.
The acquisition, which was confirmed this morning, comes after the two companies entered into “preliminary and exploratory talks” last month – although the merger is not expected to be completed until H1 2015.
Current GTECH chief executive Marco Sala will become NewCo CEO and will serve on a board of directors consisting of IGT chairman Phil Satre, who will take up the same role, and current IGT CEO Patti Hart who will serve as vice-chairman.
“With limited overlap in products and customers, the combined company will enjoy leading positions across all segments of the gaming landscape,” Sala said.
“[This deal] will increase our global scale and with a full suite of offerings and robust customer relationships across the client spectrum, the new company will have unparalleled capabilities to address the ongoing convergence across global gaming segments,” he added.
As well as the UK, the combined company will have offices in Las Vegas, Providence and Rome and the two companies said they expected the deal would create around $280m in synergies.
The new entity, which combines IGT’s game library and manufacturing and operating capabilities with GTECH’s gaming operations, would have over $6bn in pro forma revenues and more than $2bn in pro forma EBITDA for the 12 months ended 31 March 2014.
“Together we are uniquely positioned to provide the industry’s broadest and most innovative portfolio of best-in-class products, solutions and services,” Patti Hart, IGT CEO, said.
“This strategic agreements positions us to further transform the industry while providing meaningful benefit and value to our customers, employees and shareholders,” she added.
The deal comes after a difficult period for the slots manufacturer which posted a 15% year-on-year fall in revenues for the second quarter of 2014 to $513m (£305m), despite a strong performance from its social gaming division DoubleDown Interactive, which it bought for $500m in 2012.
At the time of writing GTECH’s share price was 18.44 on the Borsa Italiana, while New York-listed IGT ended yesterday at $15.50.