Ananta Agarwal
(Reuters) – International Game Technology Inc will separate its lottery division from its gaming business and merge it with casino platform provider Everi Holdings to create a separate company worth $6.2 billion including debt.
The transaction follows a strategic review of its two divisions, Global Gaming and PlayDigital, which offer gaming systems, iGaming and sports betting, and will enable the independent division to focus on its lottery business, which accounts for more than half of its revenue.
IGT’s management has previously said the intrinsic value of its business is not fully reflected in its stock price and urged it to consider strategic alternatives.
The company’s shares trade at five times projected core earnings for 2025, while lottery industry rivals trade at 11 times, according to a note from Truist Securities.
IGT shareholders are expected to own about 54% of the combined company, with Everi shareholders holding the remainder. The business will be separated in a taxable spin-off transaction with IGT shareholders and then merged with Everi, the company said.
Everi caters to both land-based and digital casinos by providing gaming content, machines and services.
“While this transaction is not materially profitable for either company, it has the potential to create a gaming tech powerhouse over the long term,” Truist analyst Barry Jonas said in a research note.
Closing of the transaction is expected to occur in late 2024 or early 2025, subject to regulatory approval, and the combined company will change its name to International Game Technology and trade on the New York Stock Exchange as IGT.
IGT will change its name and continue to trade on the NYSE under a new ticker symbol.
IGT CEO Vince Sadusky will lead the combined company based in Las Vegas, and the lottery business will be led by a new CEO.
“However, we see several significant risks to the transaction, including a lengthy regulatory approval process,” Truist’s Jonas said.
IGT said the deal is expected to save it about $85 million in costs and has projected revenue of $2.7 billion in 2024.
(Reporting by Ananta Agarwal and Aishwarya Jain in Bengaluru; Editing by Devika Shamnath and Anil D’Silva)
