Gaming equipment provider International Game Technology sold a company subsidiary that oversees its Italian gaming machine, sports betting, and digital gaming businesses for nearly $1.15 billion.
In an announcement Monday, IGT, which is headquartered in London with corporate offices in Rome and Las Vegas, said the sale of Lottomatica Videolot Rete and Lottomatica Scommesse to an affiliate of Apollo Global Management would close in the second half of next year.
IGT said it expects to receive $878.6 million at closing, $121.2 million at the end of 2021, and $151.5 million in September 2022. IGT said proceeds from the all-cash deal would be used to pay down debt.
IGT CEO Marco Sala said in a statement the transaction allowed the company to monetize “its leadership positions” and provide “enhanced financial flexibility.”
IGT had more than $7.8 billion in long-term debt at the end of September.
The investment community quickly praised the company for the transaction.
Truist Securities gaming analyst Barry Jonas said investors had been questioning IGT management about selling that portion of the company’s Italian business for multiple years now
“We think the announced sale represents a meaningful shift in management and the board’s strategy, which will likely be perceived positively,” Jonas said in a research note.
Shares of IGT, traded on the New York Stock Exchange, were up as high as 10% trading early Monday before closing at $13.12, up 59 cents, or 4.71%.
Deutsche Bank gaming analyst Carlo Santarelli said the business segment was likely to see declines given various restrictions, plus the company was going to have to spend more than $100 million in March 2022 to renew the gaming licenses for the business.
“In selling the operations, IGT is left with an operation that is likely to display an improved growth profile from both a revenue and profit perspective,” Santarelli said.
Macquarie Securities gaming analyst Chad Beynon said IGT’s recent restructuring and cost-saving initiatives and the sale “sharpened” the company’s focus on profitability and cash flows.
“We believe the sales multiple is decent considering the challenges facing the Italian market, and the removal of the Italian tax/regulatory overhang should help stabilize IGT’s earnings and multiple,” Beynon said in a research note. He added IGT can now focus its attention on “the high growth US sports/iGaming opportunity and the high-margin lotto business.”
IGT is currently providing its sports betting platform and technology in 15 states.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
