IGT Announces the Sale of Italian B2C Gaming Business for $1.15 Billion

London based International Gaming Technology (IGT) has announced that it will be selling 100% of the share capital of its wholly-owned Italian facing B2C sports betting gaming product and digital gaming business. The definitive agreement that IGT signed on Monday, 7th December, puts the combined value of Lottomatica Scommesse S.r.l and Lottomatica Videolot Rete S.p.A at $1.15 billion (€950 million).

IGT has signed a definitive agreement which will see the gaming giant offload the two entities to Gamenet Group S.p. A, a subsidiary of funds that are managed by a business partner of Apollo Global Management, Inc. Per the agreed purchase price of the companies in question, $879 million (€725 million) will be paid upon closing the deal, then another $121 million (€100 million) will be payable next year on 31st December whereas the remaining $151 million (€125 million) is due nearly another year later on 30th September 2022.

It’s also worth noting that the differed payments won’t be subjected to any additional conditions aside from the closing and the Apollo-managed funds have already filed a commitment letter for security.

Proceeds of the Sale Planned to Reduce IGT’s Debt

The cash flow generated from this transaction is aimed at reducing IGT’s overall debt, which was standing at $7.24 billion as of 30th September, based on a recently released company report. In light of the new developments, Marco Sala, the current Chief Executive officer of IGT released a statement saying that; 

Quote

"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….

Aligning with our recent reorganization, the favorable rebalancing of our business and geographic mix reframes and simplifies our priorities while improving the Company's future profit margin, cash flow generation, and debt profile."

As part of his statement CEO Marco Sala also noted that the Italian business that is undergoing the sale generated about $251 million in Adjusted EBITDA last year. The deal also comes at a time when IGT has reported a 14.9% year-on-year dip in Q3 revenue after collecting $981.5 million by end of September 2020 due to the novel Covid-19 pandemic.

Sale Expected to Close in H1 2021

IGT’s Board of Directors unanimously approved the sale arrangement and as usual, it will still face the traditional closing requirements which include approval from various regulatory institutions. Based on IGT’s projections, this sale is expected to be done and dusted by around June next year.

For this transaction, the IGT’s lead financial advisor is Credit Suisse International alongside UBS, with the latter also playing the role of fairness opinion advisor. Other than the gaming company’s Board of Directors, NCTM and White & Case are also advising IGT to see the deal through. Gamenet Group S.p.A on the other hand is under the advisement of the Italian offices of Latham & Watkins LLP, and Cleary, Gottlieb, Steen & Hamilton LLP who are teaming up with Mediobanca, Paul, Weiss, Rifkind, Wharton & Garrison LLP.