A group of institutional investors has acquired the bulk of billionaire Ronald Perelman’s stake in Scientific Games and will reconstitute the gaming equipment giant’s board, the Las Vegas-based company announced Monday.
Former Aristocrat Leisure Ltd. CEO Jamie Odell will join Scientific Games as executive chairman. Odell has been a special advisor to the company since May 2019. Former Aristocrat CFO Toni Korsanos has been named executive vice chairman.
In a statement, the company said the investment group – led by global investment firm Caledonia – will pay $28 per share for a 34.9% stake in Scientific Games from MacAndrews & Forbes Holding Co., Perelman’s New York-based investment vehicle.
Caledonia is a global investment management firm with experience in the global gaming sector, including a $2.5 billion stake in Flutter Entertainment. Over the last 15 years, the company has made significant investments in Aristocrat, holding the largest institutional shareholder stake for much of the last five years. Caledonia’s other current gaming investment is DraftKings.
No other institutional investor was named in the statement.
Perelman said in a July SEC filing he was exploring a possible sale of his 39% stake in Scientific Games, roughly 36.8 million shares. Perelman, Scientific Games current chairman, and two other MacAndrews & Forbes representatives, Barry Schwartz and Frances Townsend, will resign from the board.
New Scientific Games Executive Chairman Jamie Odell
Odell, who led Aristocrat from 2009 to 2017 before his retirement, said in a statement the company would “implement transformative initiatives to optimize the asset portfolio and unlock the full potential” of the gaming equipment provider’s products and technologies.
During Odell’s tenure with Aristocrat, the company’s market capitalization increased from $1.3 billion to approximately $7.5 billion.
Odell said Scientific Games will be “highly focused on rapidly de-leveraging the balance sheet.” The company had more than $9.3 billion on its balance sheet at the end of June.
Scientific Games CEO Barry Cottle said in a statement that the company was “pleased to have the support of our refreshed Board and new investor base.” He added that “Scientific Games is well-positioned for future success, given our industry-leading portfolio of products and technologies, loyal customer base and talented leadership team.”
Last month, Scientific Games adopted a change in control plan to ensure the company’s leadership will remain in place should the Perelman sale occur.
The plan covers six senior officers, including Cottle, and provides cash severance plans for each executive based on salary and bonuses should the executive’s employment be terminated by the company within 18 months following a change in control.
Scientific Games called the plan “a standard, protective measure.”
The transaction is expected to be executed in multiple tranches, after which no investor will beneficially own more than 9.9% of the outstanding shares of Scientific Games. The first tranche sale is expected to be completed Monday, and the transaction is expected to be fully completed over the next several weeks. The changes to the Scientific Games board becomes effective Monday.
Shares of Scientific Games closed last week at $18.97 on the Nasdaq and were up more than 18% in pre-market trading Monday.
Perelman, 77, who is currently ranked No. 63 on the Forbes 400 list of billionaires with a net worth of $6.4 billion, has built a fortune through investments in a variety of industries, including candy and cosmetics.
He has overseen Scientific Games’ rapid expansion as a gaming equipment provider starting in 2013, when the then lottery-centric company acquired slot machine developer WMS Industries for $1.3 billion. Two years later, Scientific Games bought Bally Technologies for $5.1 billion.
During that time, the company has been led by four different CEOs. Cottle has been in the position since 2018.
During 2018 and 2019, Perelman invested more than $40 million to increase his stake in Scientific Games, whose stock price collapsed in March, along with the rest of the casino industry, due to the coronavirus pandemic. The stock has since rallied back.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
