GGRAsia – IGT gaming, digital units to merge with Everi

IGT gaming, digital units to merge with Everi

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

International Game Technology Plc (IGT) will separate its global gaming and PlayDigital units and combine those businesses with Everi Holdings Inc, the companies said in a joint update on Thursday. The deal values the combined business “at approximately US$6.2 billion on an enterprise value basis,” the announcement added.

Under the terms of the agreements, at closing, IGT shareholders are expected to own approximately 54 percent of the combined company, and Everi stockholders are expected to own approximately 46 percent.

The deal will “create a comprehensive and diverse global gaming and fintech enterprise,” with a “portfolio of high-performing land-based, digital, and fintech gaming products and services,” said the announcement.

IGT is to separate its gaming and digital businesses “by way of a taxable spin-off to IGT shareholders”.

The transaction will be executed through a series of steps pursuant to which IGT “will spin off a subsidiary owning its global gaming and PlayDigital businesses to IGT shareholders”. That entity will then combine with Everi, “with IGT shareholders receiving shares of Everi common stock and Everi continuing as the parent company”.

After closing, Everi will change its name to International Game Technology Inc and will trade on the New York Stock Exchange. The deal is expected to close “in late 2024 or early 2025”.

In June, IGT had said it was mulling a sale or spin-off for its gaming and digital units.

“The transaction has been approved unanimously by all voting members of the IGT board of directors and Everi board of directors,” according to the update.

Vince Sadusky, IGT’s chief executive, will lead the combined entity, “with executives from both companies in key leadership roles”. Everi’s executive chairman, Michael Rumbolz, will serve as chairman of the board of directors of the combined company.

According to the update, the “complementary offering coupled with the global reach” of the combined entity will provide “compelling growth prospects with significant synergy opportunities”.

The combined entity was expected to “generate over US$800 million of annual adjusted cash flow in the second year following the closing, including realised synergies.”

Financial commitments

Marco Sala, IGT’s executive chair, said in prepared remarks that after closing of the deal, “IGT’s shareholders will continue to own 100 percent of IGT’s global lottery business, which is positioned for long-term success.”

IGT’s shareholders will also “own a majority of a combined company that offers global gaming, digital and fintech,” noted Mr Sala.

The announcement also quoted Mr Sadusky as saying: “We are bringing together two businesses with complementary strengths that are stronger and more valuable together.”

“The combination results in a comprehensive and diverse product offering, addressing more aspects of the gaming ecosystem across land-based gaming, iGaming, sports betting, and fintech,” stated thje IGT CEO.

He added: “The creation of separate gaming and lottery companies, each with experienced management teams and simplified business models, better positions each company to service customers and create significant value for stakeholders.”

Everi’s Mr Rumbolz said he expected the combined company to “deliver a comprehensive range of products and services” that would “engage gaming patrons and drive efficiencies and revenues” to its clients.

Financing commitments of US$3.7 billion, plus a US$500 million revolver, are being provided by Deutsche Bank and Macquarie Capital to the combined company.

About US$1.0 billion of the proceeds will be used to refinance Everi’s existing debt, approximately US$2.6 billion of the proceeds will be distributed to IGT, and the remainder will be used to pay the combined company’s financing fees.

IGT said it expects to allocate approximately US$2 billion for debt repayment, “with the remaining amount allocated to separation and divestiture expenses, tax leakage and general corporate purposes”.

IGT’s executive vice president for strategy and corporate development, Fabio Celadon, will serve as chief financial officer of the combined company.

Everi’s CEO Randy Taylor will be a member of the combined company board of directors, and Everi’s CFO Mark Labay will assume the role of chief integration officer.