Potential changes may be forthcoming at International Game Technology.
The London, England-based company announced Thursday that its board of directors is evaluating possible strategic alternatives for IGT’s Global Gaming and PlayDigital segments.
The board of directors, according to a statement issued by the company, is considering alternatives including, but not limited to, a sale, merger, or spin-off, as well as at retaining and further investing in the Global Gaming and PlayDigital segments.
“Over the last three years, IGT has sharpened its strategic focus by reorganizing around core product verticals, monetizing non-core assets, reducing structural costs, and significantly improving its credit profile,” said IGT Executive Chair Marco Sala in a statement. “We believe the intrinsic value of IGT’s market-leading businesses and diversified cash flow profile is not currently reflected in our stock price and the timing is right to assess opportunities that may enhance value for IGT’s shareholders.”
IGT is retaining Deutsche Bank, Macquarie Capital, and Mediobanca as financial advisors. Sidley Austin and White & Case are serving as legal counsel to help IGT explore strategic alternatives.
“IGT is a global leader with deep expertise in lottery, land-based gaming, igaming, and sports betting,” said IGT CEO Vince Sadusky. “We remain focused on the execution of our growth objectives and multi-year goals outlined in our November 2021 Investor Day as we undertake this review and evaluation of strategic alternatives. Regardless of the outcome of this process, IGT is well-positioned to deliver on its long-term growth and profit targets.”
IGT stated there’s no timeline for the review, and that no decision has been made “regarding any alternative.” There’s also no guarantee that the board of directors meeting will result in a transaction.
IGT will not comment on or provide updates regarding these matters until further disclosure is appropriate or required.
Wall Street analysts viewed the announcement as beneficial for IGT.
David Katz, an equity analyst for Jeffries, said the announcement “was not entirely surprising to us, given the focus of management in realizing higher stock value. We believe the pursuit is prudent and positive, although the range of outcomes and probability of success add some uncertainty. Ultimately, we believe a more positive outcome is more likely than not and therefore the announcement is a clear positive.”
Truist analyst Barry Jonas noted that IGT CEO Vince Sadusky has been “clear in his goal of a higher stock. While market multiples have come down meaningfully since Light & Wonder’s sales, we see a wide range of scenarios here with a sizable potential for value creation/re-rating (possibly equating to $55+/share for IGT’s stock today) while also potentially benefiting the whole sub-sector. We maintain our $32 PT amidst further review.”