IGT sold in $6.4 billion deal with lottery giant GTECH
16 July 2014
By Howard Stutz
Slot machine manufacturer IGT - International Game Technology has been sold for $6.4 billion to lottery giant GTECH Corporation in a merger that will create the world’s largest gaming equipment provider.
Under terms of the agreement, IGT and GTECH will combine under a newly formed holding company organized in the United Kingdom. According to the announcement, GTECH, which is headquartered in Italy, will pay $4.7 billion in cash and stock and will assume $1.7 billion of IGT’s debt.
The name, IGT, is expected to go away and the company will be operated under the name GTECH. The company will be headquartered in the United Kingdom and maintain operating headquarters in Las Vegas, Providence, R.I., and Rome.
IGT is considered the gaming industry’s largest manufacturer.
The new company is expected to apply for listing solely on the New York Stock Exchange. IGT’s shares will cease trading on the New York market and GTECH’s shares will cease trading on the Borsa Italiana at the close of the transaction.
“This outstanding combination of two global leaders redefines the future of the gaming industry,” IGT CEO Patti Hart said in statement. “Together we are uniquely positioned to provide the industry’s broadest and most innovative portfolio of best-in-class products, solutions and services.”
The transaction will combine IGT’s market-leading slot machine products, game library, manufacturing division and operating capabilities with GTECH’s gaming operations, lottery technology and services.
The merger is expected to achieve over $280 million in annual cost savings.
The transaction is subject to regulatory and shareholder approvals. The boards of both IGT and GTECH have approved the transaction. The sales price represents a 46 percent premium to IGT’s June 6 closing price.
The slot machine manufacturer announced last month that it was exploring “strategic alternatives” while Wall Street speculated the company was for sale.
The combined IGT-GTECH entity would have more than $6 billion in revenues and more than $2 billion in cash flow based on the last 12 months as of March 31.
“This transaction is transformational for our business,” GTECH CEO Marco Sala said in a statement. “With limited overlap in products and customers, the combined company will enjoy leading positions across all segments of the gaming landscape.”
Sala will serve as CEO of the new company. IGT Chairman Phil Satre will serve as the new company’s chairman and Hart will become vice chairman.
Under the terms of the transaction, IGT shareholders will receive $18.25 per share, which includes cash and shares in the new company. GTECH shareholders will exchange each of their existing GTECH shares for one share in the new company.