An analyst has discarded Bally Technologies Inc (BYI) as a potential bidder for gaming supplier International Game Technology (IGT), as talks of a possible sale intensify.
IGT on Monday confirmed the company is considering selling itself, saying in a statement it was “currently” exploring “a broad range of strategic alternatives”.
U.S.-based Sterne Agee brokerage said it does not believe Bally Technologies is interested in merging with IGT “given potential anti-trust issues”.
“However, a potential sale of IGT should unsaddle BYI’s equity multiple, which was recently anchored by IGT’s,” analyst David Bain said in a report issued on Monday.
“Should IGT be acquired by a private equity firm, or other non-listed U.S. entity, the space of investible suppliers shrinks considerably to the benefit of BYI,” wrote Mr Bain.
Some potential buyers could face antitrust hurdles in pursuing IGT as a result of the consolidation that has already occurred in the marketplace. Private equity firms, meanwhile, could face a financing challenge stemming from a likely lengthy regulatory review.
“If IGT presses ahead with a sales process, we believe it is unlikely that Bally Technologies would be able to pull off a deal given its current leverage levels, potential overlap in certain business lines (systems), and regulatory constraints, not to mention the recent Dragonplay acquisition,” Credit Suisse analysts said last week.
Reuters has reported that four firms were pursuing a bid, including lottery operator GTech SpA and private equity firm Apollo Global Management LLC, co-owner of casino operator Caesars Entertainment Corp.
So far, only GTech has confirmed talks with IGT. The company said it hired advisors to negotiate a deal.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China