Competition coming together
The announcement of a merger between International Game Technology (IGT) and Everi in a deal worth $6.2bn has caught Wall Street off-guard. Analysts expected IGT to spin off its slot machine division, but the multibillion-dollar deal announcement came instead.
agreement gives a $4bn valuation to IGT and $2.2bn for Everi
Announced on Thursday, the agreement will see the two major competitors join forces, merging their extensive operations in the online and land-based gambling industries. The agreement gives a $4bn valuation to IGT and $2.2bn for Everi.
IGT will turn its lottery division into its own company, as the segment currently accounts for more than half of its annual revenue. The remainder of the business will merge with Everi to form a “comprehensive and diverse global gaming and fintech enterprise,” named International Game Technology Inc.
Current IGT CEO Vincent Sadusky will serve as the head of the new entity.
Many benefits
Execs expect the merger to create $85m in synergies and the newly formed company to generate an estimated $2.7bn in revenue this year. The deal is still subject to the respective regulatory approvals and receiving support from both sets of shareholders.
hope that the agreement will become official by the end of 2024
Both boards voted unanimously in favor of the deal and hope that the agreement will become official by the end of 2024 or early next year. The plan is for IGT shareholders to control approximately 54% of the new company’s shares, while the other 46% will go to Everi shareholders.
IGT will receive cash worth about $2.6bn as part of the agreement, $2bn of which will go towards repaying existing debt. IGT’s share price jumped almost 6% off the back of the news on Thursday.
An exciting future
Talking about the benefits of the agreement, IGT Executive Chair Marco Sala said that both companies have similar potential, geographical presence, and capabilities.
Everi CEO Michael Rumbolz echoed these sentiments, explaining that he sees the new entity delivering wide-ranging “products and services that will engage gaming patrons and drive efficiencies and revenues.”
IGT’s board of directors have been reviewing the business to decide on the best course of action for the company, including the future of its lottery division. Existing IGT shareholders will own 100% of the lottery business, management believing this segment is well-positioned for long-term success. It will eventually change its name and be tradable on the New York Stock Exchange with a different ticker symbol.