IGT Selling Italian Gaming Device, Sports Betting Units to Apollo Unit for $1.15 Billion

Posted on: December 7, 2020, 06:49h. 

Last updated on: July 5, 2021, 01:23h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

International Game Technology (NYSE:IGT) is selling its Italian digital gaming, gaming machine, and sports wagering operations to Gamenet Group S.p.A for $1.15 billion. Gamenet is a group of affiliated funds run by private equity giant Apollo Global Management.

IGT Italy Sale
IGT is selling its Italian business to Apollo for $1.15 billion. CEO Marco Sala, seen here, says the valuation is attractive and proceeds will reduce debt. (Image: Las Vegas Review-Journal)

Selling the businesses known as Lottomatica Videolot Rete S.p.A. and Lottomatica Scommesse S.r.l. enables IGT to reduce debt, which stood at $7.24 billion at the end of the third quarter. On that basis, the divestment could prove attractive to investors, because the gaming device maker’s liabilities prior to today’s announcement were nearly triple its market capitalization. Its long-term debt-to-equity-ratio was 8.11x.

The transaction enables IGT to monetize its leadership positions in the Italian B2C gaming machine, sports betting, and digital spaces at an attractive multiple to comparable Italian transactions, providing us with enhanced financial flexibility,” said CEO Marco Sala in a statement.

The UK-based gaming technology company provides back-end services and solutions for lotteries and sportsbooks around the world, and also manufacturers slot machines.

Attractive Valuations

The sale price IGT is fetching for the two Italian units values those businesses at $1.33 billion after the pair generated nearly $251 million in 2019 adjusted earnings before interest, taxes, depreciation and amortization. (EBITDA).

Based on those figures, the gaming technology company is commanding a price that’s toward the higher end of deals previously reached for comparable assets in Italy, the Eurozone’s third-largest economy. In the US, IGT has partnerships in more than half the states where sports wagering is currently live and legal.

IGT is receiving $908.97 million upfront, $121.19 million at the end of 2021, and $151.49 million on Sept. 30, 2022, according to the terms of the transaction.

“The deferred payments are not subject to any conditions other than closing, and are secured by an equity commitment letter from the Apollo-managed funds,” according to the statement.

Apollo Loves Gaming Assets

The transaction with IGT marks the latest in a series of efforts by Apollo or related entities to scoop up various gaming assets outside the US.

Just a couple of months ago, the private equity firm was said to be interested in UK bookmaker William Hill, until Caesars Entertainment flexed its muscles, snatching up the sportsbook operator. Apollo is now rumored to be mulling a run at William Hill’s European business, which Caesars will almost certainly sell upon finalizing its takeover.

Apollo is also attempting to acquire real money casino operator Great Canadian Gaming Corp. (GCGC) for $2.5 billion in a deal announced last month. It remains to be seen what happens on that front. But several major GCGC shareholders are balking, saying the private equity shop’s offer for GCGC substantially undervalues the company relative to its post-coronavirus pandemic potential.