The online gambling GTech SpA content provider has just announced that it finally reached an acquisition agreement with American casino equipment and International Game Technology games supplier, concluding weeks of speculation surrounding the industry that such an enormous deal was getting negotiated.
GTech is set to pay out a whopping $4.7 billion in both cash and stock for the acquisition. However, including the $1.7 billion assumption of IGT debt, the final cost to GTech is closer to $6.4 billion.
IGT shareholders will get a full $18.25 a share in a mixture of 0.1819 ordinary share of the new company and $13.69 in cash, signifying an 18 percent premium regarding IGT’s closing price last Tuesday.
Morgan Stanley was subsequently hired for the task of exploring a sale within a gaming industry where ongoing consolidation keeps inhibiting slow growth.
An announcement from both companies illustrated that GTech and IGT will join forces under a recently formed holding company referred as NewCo, which will soon be headquartered in the UK.
NewCo will apply for listing exclusively on the NYSE and will establish its operating headquarters in Rome, Providence, and Las Vegas. GTech’s shares will stop trading on the Borsa Italiana, while IGT’s shares will stop trading on the NYSE as well.
It is anticipated that NewCo will carry on under the name – GTech plc.
With limited overlap in both customers and products, the combined new company will enjoy chief positions throughout all segments of the world of gaming, claims GTech’s CEO Marco Sala, who will be the new chief executive of NewCo.
IGT stated that the merger will ultimately drive competition throughout several businesses, product lines, and geographies and is anticipated to acquire over $280 million regarding synergies.
The combined unit would have more than $6 billion dollars in revenue and more than $2 billion in EBITDA according to the previous twelve trailing months starting from March 31, 2014; assuming a 1.36.1 USD/EUR exchange rate.
The CEO of IGT, Patti Hart stated that this exceptional combination of two universal leaders redefines the gaming industry’s future. Together they are in a prime position to offer the industry’s most innovative and broadest portfolio of the top products, services, and solutions.
Furthermore, this calculated agreement positions them even better in order to transform the gaming industry while providing significant and value to their clientele, shareholders, and employees.
NewCo’s first board of directors will consist of 13 primary directors including Marco Sala, who will function as NewCo’s CEO; IGT’s existing CEO, Patti Hart will function as vice-chairman; five key directors to be appointed by IGT from their current board of directors including IGT’s chairman, Phil Satre, who will function as NewCo’s new chairman; seven more directors that GTech intends to appoint; at least four of which will be self-regulating and one of which will function as a vice-chairman.
GTech claims it anticipates financing the cost part of the deal via a combination of new financing and on-hand cash. The company itself has received obligatory commitments of as much as $10.7 billion from Citigroup, Barclays, and Credit Suisse in order to finance the deal.
De Agostini S.p.A. along with its subsidiary DeA Partecipazioni S.p.A., capturing the aggregate around 59 percent of the outstanding shares of GTech, have subsequently entered into somewhat of a support agreement combined with IGT pursuant by which they’ve agreed to positively vote in favor of the said transaction.
As a consequence of the transaction, it’s expected that current GTech and IGT shareholders will actually own about 80 percent and 20 percent of NewCo ordinary shares and De Agostini is anticipated to hold about 47 percent of the outstanding ordinary shares. The entire transaction is expected to finalize in 2015, in either the first or second quarter.