Thursday, March 11, 1999 | 11:26 a.m.
International Game Technology said today it agreed to acquire Sodak Gaming Inc., which distributes slot machines and other gaming equipment to Indian casinos.
Reno-based IGT said it will pay $10 a share in cash, or about $230 million in total, for the Rapid City, S.D., company. IGT said it is studying whether to finance the transaction with bank loans, public debt or a combination of both.
The Sodak deal follows Wednesday's announcement by Anchor Gaming of Las Vegas of its plan to acquire Powerhouse Technologies of Atlanta for $280 million.
Anchor and IGT, which are joint venture partners in some wide-area-progressive and revenue-share games, are diversifying their revenue bases through the new acquisitions.
Sodak stock rose $1.125, or 14 percent, to $9.125 by midday today, while IGT shares were up 75 cents, or 5.1 percent, to $15.375.
IGT President Tom Baker said today the acquisition isn't linked to the big game maker's dispute with some casino operators over revenue-sharing slots. Some casino executives want to ban such games in Nevada.
"This deal has been in the works for a long while," Baker said. "We've been talking with Sodak for months.
"Sodak has been involved with us for years in the distribution and management of wide-area-progressive games, specifically in Native American gaming areas. They've done a terrific job and we are the dominant supplier in that area."
The acquisition has been approved by insiders owning more than 50 percent of Sodak's 22.8 million outstanding shares and is expected to be completed in the second half of 1999.
The agreement calls for an IGT subsidiary to merge with Sodak, which will operate as an independent unit. Sodak has also agreed to sell its Miss Marquette Iowa riverboat and its joint venture stake in a Louisiana riverboat project before closing.
"Sodak will continue to operate as it has for the past year," Baker said. We like their CEO a lot and have no intent now to meld the company into IGT. It will be a turnkey operation."
Sodak President and Chief Executive Officer Roland Gentner has agreed to remain in those positions for at least a year.
Last June, Gentner instituted a major restructuring of Sodak, shifting its focus to the profitable Indian distribution business and trimming corporate overhead.
He began divesting Sodak's Latin American businesses, selling a Brazilian unit and putting operations in Peru and Ecuador on the auction block.
For the nine months ended Sept. 30, Sodak had net income of $6.4 million, or 28 cents a share, compared with net of $2.4 million, or 10 cents a share, in the first nine months of 1997. Revenue rose to $98.8 million from $98.1 million.
Baker said IGT expects the acquisition to be accretive to IGT's earnings.