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November 22, 2017

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Las Vegas-based IGT sold in deal valued at $6.4 billion


Steve Marcus

People try out a Bridesmaids video slot machine by International Game Technology (IGT) during the G2E convention at the Sands Expo Center Tuesday, Sept. 24, 2013.

Italian lottery operator Gtech is purchasing Las Vegas-based slot maker International Game Technology for $6.4 billion, the companies announced early Wednesday.

The cash and stock deal also includes the assumption of $1.7 billion in net debt by Gtech.

The transaction, the companies said, will create the world's leading gaming equipment manufacturer.

Under the terms of the transaction, IGT and Gtech will combine under a newly formed holding company, NewCo, based in the United Kingdom but with operating headquarters in Las Vegas, Providence and Rome.

IGT shareholders will receive an aggregate value of $18.25 per IGT share in cash and common stock. Gtech shareholders will exchange each of their existing shares for one newly issued NewCo share.

The combined entity would have over $6 billion in revenues.

"We are extremely pleased to reach a definitive merger agreement with Gtech as a result of our exploration of strategic alternatives to increase shareholder value. This outstanding combination of two global leaders redefines the future of the gaming industry," Patti Hart, IGT's CEO, said in a news release announcing the deal.

"With limited overlap in products and customers, the combined company will enjoy leading positions across all segments of the gaming landscape. ... The transaction will significantly enhance our cash flow and financial strength, and provide clear and achievable cost and revenue synergies," said Marco Sala, Gtech's CEO.

IGT employed 5,000 people in Las Vegas at the start of 2014 but announced plans in March to shed 7 percent of its workforce because of declines in its North American gambling revenue and weakening currencies and other problems in its international business.

Rome-based Gtech SPA manages lotteries in the United States, Italy, Spain and South America. Gtech had about $4.2 billion in revenues and 8,600 employees with operations in about 60 countries.

NewCo will apply for listing solely on the New York Stock Exchange. IGT's shares will cease trading on the NYSE and Gtech's shares will cease trading on the Borsa Italiana. It is expected that NewCo will continue under the name Gtech PLC.

The transaction, which is expected to close in 2015, has been unanimously approved by the boards of directors of both companies. Officials said the sale represents a 46 percent premium to the closing price of IGT's common stock on June 6, the last trading day before initial reports that IGT was exploring a potential sale.

Sala will serve as CEO of NewCo. Phil Satre, IGT's chairman, will serve as chairman of NewCo, and Hart will serve as a vice chairman.

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