In a landmark deal set to reshape the landscape of the gaming industry, International Game Technology has entered into a definitive agreement to merge its global gaming and PlayDigital units with Everi Holdings Inc. This transaction, valued at an impressive $6.2 billion, not only marks a significant moment for both companies but also promises to create a powerhouse in the world of gaming and digital entertainment.
Investors of IGT will emerge as the majority stakeholders, holding 54% of the new company, while Everi shareholders will hold the remaining 46%. Vince Sandusky, the CEO of IGT, is poised to lead the combined entity, capitalizing on his executive expertise to guide the fusion of these two gaming giants. Further consolidating the leadership, Everi’s Executive Chairman, Michael Rumbolz, is set to take his extensive experience to the role of chairman of the newly merged company’s board.
This major decision comes on the heels of IGT’s announcement last June, when it began evaluating strategic alternatives for these very units. Initial projections had the slot machine segment of IGT’s operations pegged to garner between $4 billion and $5 billion if sold separately. However, the aggregate valuation of the global gaming and PlayDigital units now strikes a substantial increase in worth, illustrating a significant upside for IGT shareholders, especially considering IGT’s market capitalization was just $5.34 billion at the start of Thursday.
The mechanics of the transaction are crafted with precision, involving the spin-off of a subsidiary that will embody IGT’s Global Gaming and PlayDigital businesses, which will be directly distributed to IGT shareholders. This entity will then proceed to amalgamate with Everi, where shares of Everi common stock will be allocated to IGT shareholders. This will effectively grant them an approximately 54% interest in the combined company, aligning with Everi’s existing stockholders for the balance of ownership.
With an expected closure by late this year or early 2025, the fusion will birth a new company that will retain the name IGT and continue trading on the New York Stock Exchange under the IGT ticker symbol. Headquarters will be established in Las Vegas, the current base of Everi, cementing the company’s presence in the gaming capital.
Highlighting the IGT and Everi union is not just a strategic enhancement of their slot operations. It is an integration that will amplify the company’s reach into lucrative spheres such as fintech, iGaming, and sports betting, all under one synergistic, vertically integrated entity. The financial projections for the new IGT are robust, with 2024 sales anticipated to hit $2.7 billion and EBITDA expected to reach around $1 billion. Furthermore, the deal is foreseen to unlock $85 million in cost savings and propel the combined entity to achieve $800 million in annual free cash flow by the second year after the deal’s completion.
Accompanying this marriage of gaming titans is the assumption of $2.6 billion in debt that will be assigned to IGT investors. Despite this, there is an optimistic projection of quick financial stabilization due in part to a committed path to rapid de-leveraging. Some analysts have even speculated that the arrangement may attract additional takeover interest from other entities eyeing the North American slots and gaming market.
On a concluding note, IGT’s lottery business stands to benefit distinctly from the divestiture of the Global Gaming and PlayDigital arms. The lottery division, which accounts for a substantial 75% of IGT’s earnings, is likely to garner newfound appreciation from investors as a focussed lottery enterprise of international standing.
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