Suitors interested in buying Nevada-based casino equipment company International Game Technology (IGT) are likely to need to write a cheque for close to US$2 billion, suggests a note from Robert Shore of Union Gaming Group LLC.
The most likely candidates are financial firms with a tolerance for regulatory hurdles – including approvals for the deal by as many as 300 separate jurisdictions where IGT does business – or “an entity already in the equipment space,” writes Mr Shore.
Earlier this month, lottery operator GTech SpA confirmed it was in talks to buy New York-listed IGT.
“At US$1.9 billion in ‘required’ equity per our estimate, the pool of buyers could presumably be counted on one hand,” states Union Gaming’s Robert Shore. He adds that DoubleDown Casino, described as the world’s largest multi-game social casino network, and acquired by IGT for approximately US$500 million in February 2012, could possibly be spun off by the takeover business. That would “reduce required equity substantially,” he stated.
“We believe that a financial buyer remains a likely scenario for the free cash flow, niche positioning of the business, strategic divestiture opportunities, and potential fundamental turn-around story,” adds Mr Shore.
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