|[July 16, 2014]
GTECH to Acquire IGT Creating Global Leader in Gaming Technology and Equipment for $4.7 Billion in Cash and Stock
ROME & PROVIDENCE, R.I. --(Business Wire)--
GTECH S.p.A. (MIL:GTK), the Italy-based leader in worldwide regulated
gaming, today announced that it has entered into a definitive merger
agreement with International Game Technology (News - Alert), Inc. (NYSE: IGT), a global
leader in casino and social gaming entertainment, headquartered in Las
Vegas, Nevada, U.S.A. Under the terms of the transaction, IGT and GTECH
will combine under a newly formed holding company organized in the
United Kingdom (NewCo). IGT shareholders will receive a combination of
$13.69 in cash plus 0.1819 NewCo shares (subject to adjustment) for each
share of IGT common stock, equal to an aggregate value of $18.25 per IGT
share. GTECH shareholders will exchange each of their existing GTECH
shares for one (1) newly issued ordinary share of NewCo. The aggregate
transaction value is approximately $6.4 billion inclusive of the
assumption of approximately $1.75 billion in existing IGT net debt.
The transaction creates the world's leading end-to-end gaming company,
uniquely positioned to capitalize on opportunities across global gaming
market segments. The new company combines best-in-class content,
operator capabilities, and interactive solutions, and joins IGT's
leading game library and manufacturing and operating capabilities with
GTECH's gaming operations, lottery technology and services. The
agreement drives scale across all businesses, geographies and product
lines and is expected to achieve more than $280 million in run-rate
synergies by the third year following closing of the transaction.
Commenting on the transaction, Marco Sala, Chief Executive Officer of
GTECH S.p.A. said, "This transaction is transformational for our
business. With limited overlap in products and customers, the combined
company will enjoy leading positions across all segments of the gaming
landscape. It will increase our global scale and with a full suite of
offerings and robust customer relationships across the client spectrum,
the new company will have unparalleled capabilities to address the
ongoing convergence across global gaming segments. Our expertise across
these segments and greater ability to invest in R&D will improve player
experiences and benefit our government and business clients. The
transaction will significantly enhance our cash flow and financial
strength, and provide clear and achievable cost and revenue synergies."
"We are extremely pleased to reach a definitive merger agreement with
GTECH as a result of our exploration of strategic alternatives to
maximize shareholder value. This outstanding combination of two global
leaders truly defines the future of gaming entertainment. Together we
are uniquely positioned to provide the industry's broadest and most
innovative portfolio of best-in-class products, solutions and services.
This strategic agreement positions us to further transform the industry
while providing meaningful benefit and value to our customers, employees
and shareholders," said Patti Hart, IGT CEO. "Our dedicated employees'
commitment and innovation have enabled us to capitalize upon this
opportunity, and we look forward to integrating with the GTECH team to
achieve even greater levels of success."
The combined entity would have more than $6 billion in pro forma
revenues and in excess of $2 billion in pro forma EBITDA based on the
last twelve trailing months as of March 31, 2014 at current exchange
rates1. The combined entity is expected to generate
significant free cash flow and the transaction will be accretive on a
cash earnings per share basis immediately.
Additional Transaction Details
The stock component of the purchase price is subject to adjustment with
a 15 percent up and down collar based on the trading price of GTECH
shares prior to the closing of the transaction, with any increase in
consideration payable to IGT stockholders to be paid in cash. The
transaction will include an election mechanism for IGT shareholders to
elect all-stock, all-cash consideration or a mixed election, subject to
proration in accordance with the terms of the merger agreement.
IGT and GTECH will combine under a newly formed UK holding company with
its corporate headquarters in the United Kingdom and operating
headquarters in each of Las Vegas, Providence and Rome. NewCo will be
solely listed on the New York Stock Exchange (NYSE). IGT's shares will
cease trading on the NYSE and GTECH's shares will cease to trade on the
Italian Stock Exchange (Borsa Italiana).
Immediately before the GTECH-NewCo merger is completed, GTECH will
transfer its Italian business into wholly-owned Italian subsidiaries
which, after the merger, will become subsidiaries of NewCo.
De Agostini S.p.A. and its subsidiary DeA Partecipazioni S.p.A., holding
in the aggregate approximately 59 percent of GTECH's outstanding shares,
have entered into a support agreement with IGT pursuant to which they
have committed with IGT to vote in favor of the transaction and
undertaken certain lock-up commitments. Certain undertakings qualifying
as a "shareholders agreement" with respect to GTECH, will be published
in accordance with Article 122 of the Italian Unified Financial Act and
As a result of the transaction, it is anticipated that existing IGT and
GTECH shareholders will own approximately 20 percent and 80 percent,
respectively (assuming no withdrawal rights are exercised), of NewCo's
ordinary shares and De Agostini is expected to hold approximately 47
percent of NewCo's outstanding ordinary shares.
The transaction, which has been approved by the boards of directors of
both companies, is currently expected to be completed in the first or
second quarter of 2015. The transaction is subject to the receipt of
required antitrust and gaming clearances, approval by each of the IGT
and GTECH shareholders, and other customary conditions. The GTECH-NewCo
merger will trigger the withdrawal right of GTECH shareholders not
approving the transaction in the meeting of GTECH shareholders. GTECH
can terminate the Merger Agreement and not proceed to the closing of the
transaction, inter alia, in the event that withdrawal rights are
exercised in excess of 20 percent of GTECH share capital. GTECH expects
to finance the cash portion of the consideration through a combination
of cash on hand and new financing. In connection with entering into the
transaction, GTECH has received binding commitments totaling $10.7
billion from Credit Suisse, Barclays and Citigroup to finance the
transaction, including refinancing certain existing indebtedness.
Upon the closing of the transaction, the initial board of directors of
NewCo will be comprised of 13 directors including Marco Sala, GTECH's
Chief Executive Officer, who will serve as the Chief Executive Officer
of NewCo; five directors to be appointed by IGT from IGT's existing
board of directors, including Phil Satre, IGT's Chairman, who will serve
as Chairman of NewCo, Patti Hart, IGT's curent Chief Executive Officer,
who will serve as a Vice-Chairman, and three additional independent
directors and six directors to be appointed by De Agostini, at least
four of whom will be independent and one of whom will serve as a
Vice-Chairman and one independent director mutually agreed by GTECH and
IGT. NewCo will comply with NYSE corporate governance listing standards
applicable to non-controlled, U.S. domestic issuers. The UK Takeover
Panel has confirmed that NewCo will not be subject to the UK Takeover
In addition, to encourage long-term share ownership and to facilitate
the realization of the benefits to be achieved through the combination,
NewCo will implement a loyalty share program that will offer all NewCo
shareholders (at the closing of the transaction and thereafter) that
hold their NewCo ordinary shares continuously for at least three years,
the right to receive 1 (non-transferable) special voting share per NewCo
ordinary share carrying 0.9995 votes per share.
Credit Suisse is acting as lead financial advisor to GTECH and left lead
arranger and bookrunner for the acquisition financing for the
transaction; Barclays and Citigroup are also financial advisors to GTECH
and, together with Credit Suisse, are acting as joint lead arrangers,
joint bookrunners and co-syndication agents of the acquisition financing.
Wachtell, Lipton, Rosen & Katz, Clifford Chance LLP and Lombardi
Molinari Segni are serving as legal advisors to GTECH in connection with
the transaction. Morgan Stanley is providing financial advice, and
Sidley & Austin LLP and Allen & Overy are acting as legal advisors to
GTECH will hold an investor conference call to discuss the combination
today at 2:00 a.m. (Eastern Time). To access the call, please use one of
the following dial-in numbers: 877-546-5018 (U.S. and Canada), 39
0666053188 (Italy) and 857-244-7550 (International), and enter the
Conference ID number: 84883561.
A live broadcast of the conference call will be available online by
visiting GTECH.com and clicking on the "Investor Relations" tab on its
website, or by visiting http://edge.media-server.com/m/p/fhpycz96/lan/en.
Related presentation materials will be posted to the company's "Investor
Relations" section in Adobe (News - Alert) Acrobat format prior to the call.
A telephone replay of the call will be available until July 23, 2014.
The replay dial-in numbers are 888-286-8010 (U.S. and Canada) and
617-801-6888 (International), and the Conference ID number is
68896648.In addition, the call will be archived on the companies' web
sites in the "Investor Relations" sections.
GTECH S.p.A. is a leading commercial operator and provider of technology
in the regulated worldwide gaming markets, delivering best-in-class
products and services, with a commitment to the highest levels of
integrity, responsibility, and shareholder value creation. The Company
is listed on the FTSE MIB at the Italian Stock Exchange under the
trading symbol "GTK" and is majority owned by De Agostini S.p.A. In
2013, GTECH had approximately �3.1 billion in revenues and 8,600
employees with operations in approximately 60 countries. For more
information, please visit www.gtech.com.
International Game Technology (NYSE: IGT) is a global leader in casino
gaming entertainment and continues to transform the industry by
translating casino player experiences to social, mobile and interactive
environments for markets around the world. IGT's acquisition of
DoubleDown Interactive provides engaging social casino style
entertainment to more than 6 million players monthly. The company had
revenues of $2.34 billion and adjusted EBITDA of $842.6 million as of
fiscal year end 2013. More information about IGT is available at IGT.com
or connect with IGT at @IGTNews or facebook.com/IGT. Anyone can play at
the DoubleDown Casino by visiting http://apps.facebook.com/doubledowncasino
Important Information for Investors and Shareholders
This communication is not intended to and does not constitute an offer
to sell or the solicitation of an offer to subscribe for or buy or an
invitation to purchase or subscribe for any securities or the
solicitation of any vote in any jurisdiction pursuant to the proposed
transactions or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. No offer of securities shall be made except by means of
a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and applicable European regulations. Subject to
certain exceptions to be approved by the relevant regulators or certain
facts to be ascertained, the public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would constitute
a violation of the laws of such jurisdiction, or by use of the mails or
by any means or instrumentality (including without limitation, facsimile
transmission, telephone and the internet) of interstate or foreign
commerce, or any facility of a national securities exchange, of any such
NewCo will file with the SEC (News - Alert) a registration statement on Form F-4, which
will include the proxy statement of IGT that also constitutes a
prospectus of NewCo (the "proxy statement/prospectus"). INVESTORS AND
SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, AND OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, IN THEIR ENTIRETY CAREFULLY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT IGT, GTECH, NEWCO, THE PROPOSED TRANSACTIONS AND
RELATED MATTERS. Investors and shareholders will be able to obtain free
copies of the proxy statement/prospectus and other documents filed with
the SEC by the parties through the website maintained by the SEC at www.sec.gov.
In addition, investors and shareholders will be able to obtain free
copies of the proxy statement/prospectus and other documents filed with
the SEC by the parties by contacting Investor Relations, IGT (for
documents filed with the SEC by IGT) or Investor Relations, GTECH (for
documents filed with the SEC by NewCo).
Italian CONSOB Regulation No. 17221
Pursuant to Article 6 of the CONSOB Regulation no. 17221 of March 12,
2010 (as amended, the "CONSOB Regulation"), NewCo is a related party of
GTECH, being a wholly owned subsidiary of GTECH.
The merger agreement providing for the GTECH-NewCo merger - which
exceeds the thresholds for "significant transactions" pursuant to the
Regulation - was approved [unanimously] by the GTECH board of directors.
The merger agreement and] the GTECH-NewCo merger are subject to the
exemption set forth in Article 14 of the CONSOB Regulation and Article
3.2 of the "Disposizioni in materia di operazioni con parti correlate"
("Procedures for transactions with related parties") adopted by GTECH on
July 28, 2011 and published on its website (www.gtech.com).
Pursuant to this exemption, GTECH will not publish an information
document (documento informativo) for related party transactions as
provided by Article 5 of the CONSOB Regulation. Prior to the meeting of
GTECH shareholders, GTECH will publish an information document pursuant
to Article 70, paragraph 6, of the CONSOB Regulation on Issuers (CONSOB
Regulation no. 11971 of May 24, 1999, as amended), in accordance with
Participants in the Distribution
IGT, GTECH and NewCo and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies
from the shareholders of IGT in respect of the proposed transactions
contemplated by the proxy statement/prospectus. Information regarding
the persons who are, under the rules of the SEC, participants in the
solicitation of the shareholders of IGT in connection with the proposed
transactions, including a description of their direct or indirect
interests, by security holdings or otherwise, will be set forth in the
proxy statement/prospectus when it is filed with the SEC. Information
regarding IGT's directors and executive officers is contained in IGT's
Annual Report on Form 10-K for the year ended September 28, 2013 and its
Proxy Statement on Schedule 14A, dated January 24, 2014, which are filed
with the SEC.
Cautionary Statement Regarding Forward Looking Statements
This press release contains forward-looking statements (including within
the meaning of the Private Securities Litigation Reform Act of 1995)
concerning IGT, GTECH, NewCo, the proposed transactions and other
matters. These statements may discuss goals, intentions and expectations
as to future plans, trends, events, results of operations or financial
condition, or otherwise, based on current beliefs of the management of
IGT and GTECH as well as assumptions made by, and information currently
available to, such management. Forward-looking statements may be
accompanied by words such as "aim," "anticipate," "believe," "plan,"
"could," "would," "should," "estimate," "expect," "forecast," "future,"
"guidance," "intend," "may," "will," "possible," "potential," "predict,"
"project" or similar words, phrases or expressions. These
forward-looking statements are subject to various risks and
uncertainties, many of which are outside the parties' control.
Therefore, you should not place undue reliance on such statements.
Factors that could cause actual results to differ materially from those
in the forward-looking statements include failure to obtain applicable
regulatory or shareholder approvals in a timely manner or otherwise;
failure to satisfy other closing conditions to the proposed
transactions; risks that the new businesses will not be integrated
successfully or that the combined companies will not realize estimated
cost savings, value of certain tax assets, synergies and growth or that
such benefits may take longer to realize than expected; failure to
realize anticipated benefits of the combined operations; risks relating
to unanticipated costs of integration; reductions in customer spending,
a slowdown in customer payments and changes in customer demand for
products and services; unanticipated changes relating to competitive
factors in the industries in which the companies operate; ability to
hire and retain key personnel; the potential impact of announcement or
consummation of the proposed transactions on relationships with third
parties, including customers, employees and competitors; ability to
attract new customers and retain existing customers in the manner
anticipated; reliance on and integration of information technology
systems; changes in legislation or governmental regulations affecting
the companies; international, national or local economic, social or
political conditions that could adversely affect the companies or their
customers; conditions in the credit markets; risks associated with
assumptions the parties make in connection with the parties' critical
accounting estimates and legal proceedings; and the parties'
international operations, which are subject to the risks of currency
fluctuations and foreign exchange controls. The foregoing list of
factors is not exhaustive. You should carefully consider the foregoing
factors and the other risks and uncertainties that affect the parties'
businesses, including those described in IGT's Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
other documents filed from time to time with the Securities and Exchange
Commission (the "SEC") and those described in GTECH's annual reports,
registration documents and other documents filed from time to time with
the Italian financial market regulator (CONSOB). Except as required
under applicable law, the parties do not assume any obligation to update
these forward-looking statements. Nothing in this announcement is
intended, or is to be construed, as a profit forecast or to be
interpreted to mean that earnings per GTECH share or IGT share for the
current or any future financial years or those of the combined group,
will necessarily match or exceed the historical published earnings per
GTECH share or IGT share, as applicable.
1 Assumes a USD/EUR exchange rate of 1.36. GTECH reports its
financial results under International Financial Reporting Standards,
while IGT reports its financial results under U.S. Generally Accepted
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