Apollo buys Everi, IGT gaming and digital biz in US$6bln deal

Jul 29, 2024 Newsdesk Industry Talk, Latest News, Top of the deck, World  

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International Game Technology Plc’s (IGT’s) gaming and digital business and Everi Holdings Inc will be simultaneously acquired by funds managed by affiliates of private equity firm Apollo Global Management Inc. The all-cash transaction values the acquired businesses at approximately US$6.3 billion on a combined basis, the three companies said in a joint update on Friday.

Everi’s stockholders will receive US$14.25 per share in cash, representing a 56-percent premium over Everi’s closing share price on Thursday (July 25).

IGT will receive US$4.05 billion of gross cash proceeds, according to the statement. IGT said “significant portions” of the cash proceeds are expected to be used “to repay debt and to be returned to shareholders”.

In late February, IGT and Everi announced that they had an agreement whereby  IGT would separate its gaming and digital business by way of a taxable spin-off to IGT shareholders and then immediately combine such business with Everi. That deal has now been terminated, said the announcement.

Under the terms of the new agreements, the Apollo-linked funds will acquire IGT Gaming – comprising the gaming and digital segments – and Everi. “Following closing, IGT Gaming and Everi will be privately owned companies that are part of one combined enterprise,” according to the update.

The transaction is subject to receipt of regulatory approvals and approval by Everi stockholders, and is expected to be completed by the end of the third quarter of 2025. “IGT shareholder approval is not required for the transaction,” added the statement.

The announcement said that De Agostini SpA, the majority shareholder of IGT, “has committed to make a minority equity investment in the combined enterprise at the closing of the transaction”.

Upon completion of the sale of IGT gaming and digital businesses, the current IGT will be a “pure-play lottery company” under a new name and ticker symbol.

IGT’s chief executive Vince Sadusky will oversee the separation of IGT gaming and digital businesses and support the transition until its completion.

“Post-closing, Mr Sadusky will continue in his role, leading the lottery-focused company,” said the announcement.

Following the acquisitions, current-IGT executive vice president for strategy and corporate development, Fabio Celadon, will serve as chief financial officer (CFO), and current-Everi CFO, Mark Labay, will assume the role of chief integration officer of the combined enterprise.

The newly formed combined enterprise will be headquartered in Las Vegas, Nevada, in the United States.

‘Cleaner structure’

Brokerage B.Riley Securities Inc observed in a Friday memo that IGT shareholders will received “56-percent more cash” than under the previous IGT and Everi deal terms.

“We believe the new transaction is a much cleaner structure, eliminating unknown tax implications from a previously planned Everi share distribution to IGT shareholders, which has been the subject of pushback from investors,” wrote B.Riley Securities’ analyst David Bain.

“Post-transaction, IGT is a better-capitalised lottery pure-play,” said Mr Bain, adding that Everi also “benefits from the transaction change”.

He added: “Clearly, the new transaction eliminates merger execution risk for [Everi’s] shareholders, and rewards holders with a 56-percent premium to yesterday’s [Thursday’s] closing price.”

Mr Bain further noted: “Apollo is well-known by both investors and the gaming industry, and we believe it is well-suited – and capitalised – to assist in the combination of IGT and Everi and support the combined company’s strategic initiatives.”

Friday’s announcement quoted IGT’s Mr Sadusky as saying: “Our new agreement represents a positive evolution of our previously announced transaction with Everi and a successful culmination of the strategic review process that IGT launched last year.”

He added: “This transaction will allow IGT Gaming to continue to invest in and enhance its growing core segments while providing customers with a more comprehensive portfolio of offerings.”

Randy Taylor, Everi’s president and CEO, said the new transaction “maintains the integrity and strong strategic rationale” of the original agreement with IGT, “but now also provides significant and certain value to our stockholders as we move forward with the Apollo funds as our partner.”

Mr Taylor added: “Under private ownership, we believe we will be better positioned to accelerate the integration of our two organisations for the benefit of our customers and employees.”

Apollo has a track record of investments across the leisure sector, including in the gaming and entertainment sectors.

The update cited Daniel Cohen, partner at Apollo, as saying that the deal will establish “a leading, diversified solutions provider that is well positioned across the entire gaming ecosystem”.

“We strongly believe in the value proposition of the combination and are confident these complementary gaming platforms will be even better positioned under private ownership to capture the opportunities ahead to grow and create value,” added Mr Cohen.

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