Australian gaming supplier Aristocrat Leisure Ltd today announced that it has entered into an agreement to acquire Video Gaming Technologies Inc (VGT). Aristocrat will pay US$1.28 billion in cash for the U.S.-based gaming machine provider, it said in a filing to the Australian Securities Exchange.
Privately owned VGT is a provider of gaming machines for the leased tribal gaming market in North America. The company, headquartered in Tennessee, had an installed base of approximately 20,200 leased machines at the end of last year, according to Aristocrat’s filing.
The majority of VGT’s installed base is located in the Oklahoma tribal gaming market, but the company also has operations in other U.S. states.
VGT generated revenue of US$236 million in 2013 and adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$157 million. Aristocrat says the deal will fuel earnings per share growth in the low-to-mid teens.
The acquisition will allow the Australian company to enlarge its footprint in the North American tribal leased machine market. After the acquisition, Aristocrat will have an estimated market share of 31 percent versus the current 5 percent, well ahead of second-placed International Game Technology, which has a market share of 22 percent, according to a presentation from Aristocrat.
The acquisition is still subject to required regulatory and other approvals. It is expected to be completed by March 2015.
“VGT has a complementary product offering and provides a unique opportunity to accelerate our growth in the U.S. recurring revenue segment, which has for some time been an important strategic objective of Aristocrat,” the company’s chief executive Jamie Odell said in a statement. “The strategic and financial benefits are compelling,” he added.
Aristocrat had already said last month that it was in advanced discussions with VGT on a possible transaction.
In today’s filing, Aristocrat said it would fund the acquisition and refinance its debt facilities through new, fully committed debt facilities and an underwritten, institutional placement of A$375 million (US$351 million). The new debt facilities will be comprised of a US$1.3 billion seven-year term loan and an A$100 million five-year revolving facility. Aristocrat shares were halted today for the capital raising.
The company also plans to conduct an A$30 million share offer to members of the Ainsworth family, who are amongst the group’s largest shareholders. Retail shareholders will also be able to buy up to A$15,000 each in new shares.
Last week, Aristocrat announced the acquisition of all material assets of U.S.-based Paltronics Inc, including intellectual property relating to products.
The acquisition of VGT by Aristocrat is the latest in a string of mergers and acquisitions recently taking place in the supplier side of the gaming industry, signalling to an ongoing consolidation trend. Several analysts see the current wave of transactions as a potential positive for investors.
Apr 06, 2020Macau has seen a net reduction of 191 non-resident workers employed in the local gaming industry during the months of February and March, according to figures provided to GGRAsia by the city’s...
Apr 06, 2020
"From 7 April 2020 [to 4 May 2020], all attractions, theme parks, museums and casinos [in Singapore] will be closed"
Ministry of Health of Singapore