GGRAsia – Sci Games to pay US$21 mln for DEQ Systems

Sci Games to pay US$21 mln for DEQ Systems

Sep 01, 2016 Newsdesk Latest News, Top of the deck, World

Casino equipment and lottery services firm Scientific Games Corp announced on Wednesday a definitive agreement to acquire Canadian gaming supplier DEQ Systems Corp for a total consideration of CAD27.2 million (US$20.8 million).

Scientific Games will acquire all of DEQ’s issued and outstanding common shares for a cash payment of CAD0.38 per share, the firm said in a press release.

Scientific Games said the acquisition would strengthen its table products offering by adding more proprietary table games and table progressive systems, including a suite of table progressives that provide a recurring revenue stream. It added that the transaction is expected to be accretive to its earnings and operating cash flow in 2017.

DEQ provides table-game-bonusing technology, table games, baccarat results tracking and jackpot connectivity products to more than 300 casinos in 30 countries, according to its corporate website.

DEQ’s share price more than doubled after the deal was announced, with the stock closing at CAD0.37 per unit on Wednesday. The firm is listed on Canada’s TSX Venture Exchange, a public venture capital market for emerging companies.

“Their [DEQ's] established and high-performing library of table games, table progressives, and random bonusing systems will enhance our offerings, add to our recurring revenue base, and provide even more ways for casinos to engage players through Scientific Games’ extensive end-to-end casino portfolio,” said Scientific Games senior vice president for table and utility products, Roger Snow, in a statement included in the press release.

He added: “We’re especially excited about DEQ’s EZ Baccarat [pictured], the world’s leading baccarat brand with nearly 800 table games in 150 casinos worldwide.”

The transaction is expected to close in the fourth quarter of 2016 or the first quarter of 2017, subject to approval by DEQ’s shareholders, receipt of gaming approvals in certain jurisdictions and other customary closing conditions, according to Wednesday’s press release. The deal requires the support of two-thirds of DEQ shareholders at a vote in late October or early November.

According to the press release, DEQ generated revenue of CAD9.5 million and gross profit of CAD8.1 million for the 12 months to May 31, 2016.

Commenting on the deal, DEQ’s president and chief executive, Joseph Bertolone, said: “We believe that this is a very good transaction for our company. We look forward to working closely with the Scientific Games team to ensure a smooth transition and continued innovation for gaming operators and their players around the world.”

Scientific Games, originally a specialist in lottery equipment and management, in November 2014 acquired slot machine and floor management systems specialist Bally Technologies in a transaction valued at US$5.1 billion. The deal came approximately one year after Bally Technologies acquired Nevada-based table games equipment and slot machine supplier SHFL entertainment Inc in a US$1.3-billion transaction.

The casino equipment and lottery services firm earlier in August announced Kevin M. Sheehan as the company’s new chief executive and president, replacing Gavin Isaacs.