The Nevada Gaming Control Board Wednesday gave its blessing for funds managed by Apollo Global Management to acquire Everi’s and IGT’s gaming and digital business as part of a single enterprise in a $6.3 billion all-cash transaction. The final approval goes before the Nevada Gaming Commission June 26. The deal is expected to close by the end of the third quarter.
The combined enterprises will be known as IGT, headquartered in Las Vegas, and privately owned. Apollo, a global asset manager, owns the Venetian, Palazzo, and Venetian Expo on the Strip and a stake in Great Canadian Entertainment. The acquisition by Apollo announced in July 2024 terminated the agreement between IGT and Everi entered in February 2024 to create a new global gaming and fintech enterprise.
IGT has offerings from lotteries and gaming machines to sports betting and digital. Everi develops gaming content, machines, and systems for land-based, igaming, and bingo operators.
Fitch Ratings said the combined enterprises will have more slot machines in the North American market than Light & Wonder and a combined market share over Light & Wonder and Aristocrat.
Daniel Cohen, a partner at Apollo, said they raise funds from pension funds, institutional investors, endowments, and high net worth individuals to make investments in businesses, grow them over time, and sell them to return profits. “We’ve dedicated a significant amount of time over the past 20 years to the gaming sector,” Cohen said.
Cohen said by taking the companies private, they aren’t beholden to quarterly reports and share prices, which allows them to create value longer term.
“Gaming is the most prolific and successful investment area in private equity. We’ve purchased and monetized businesses for over two decades and obviously developed an expert network and knowledge that has allowed us to make investments to position those for success.”
Cohen said they attempted to acquire IGT in 2014 and again last fall.
“We have a track record of building these businesses,” Cohen said. “When we owned PlayAGS, we made over 20 acquisitions and almost quadrupled the size in the nine years we owned it. All of that experience gave us the confidence to move forward on this $6 billion-plus transaction to merge IGT Gaming and Everi.”
Cohen talked about the two operators were planning to spin out IGT with Everi to form a new public company. In February 2024, Apollo approached both companies to see if they were interested in an alternative transaction and continuing the integration of the two businesses.
Gaming Control Board Chair Kirk Hendrick asked how they got the companies to change their minds. In the fall of 2023 when IGT announced it would either sell or carve out its gaming business, Cohen recounted that they attempted to make a bid to purchase the whole company.
“We thought with the IGT gaming business alone, there’s a tremendous amount of opportunity to grow the business and become a scale player. When we ultimately couldn’t agree on a value and heard rumblings they were starting to explore a merger with Everi, we dusted off our work on what that merger could look like.”
Cohen said they were kicking themselves when they didn’t figure on doing this acquisition from the beginning. “Apollo isn’t a hostile investor. I approached the board of both companies on a friendly basis.”
Under the terms of the new agreements, Everi stockholders will receive $14.25 per share in cash, representing a 56% premium over the company’s closing share price on July 25, 2024. IGT will receive $4.05 billion of gross cash proceeds for IGT Gaming. IGT expects significant portions of the cash to be used to repay debt and to be returned to shareholders.
“We turned the stock consideration both shareholders were going to receive into cash,” Cohen said.
Apollo is willing to take the “heavy lift” instead of what the merging companies would do to any share price over the short term.
“Our goal is very simple: to create a very large, scaled, diversified gaming technology platform in an industry that’s growing,” Cohen said. “We’re combining two franchise assets and complementary product portfolios to build a leader in land-based gaming, fintech, systems, and igaming. We will be one the few that has every touchpoint to the casino. Our goal long term is to become the operator supplier. If you’re the Venetian, Caesars, or anyone else, you can go to IGT for every one of your product needs, which would allow us to continue to invest in products and innovate with our customers to create the next generation of what casino technology products will look like.
“Today, the combined businesses have a margin profile that’s significantly lower than our largest peers, Light & Wonder and Aristocrat, and we’re looking to close that gap,” Cohen said. “A large part of that optimization is around combining two very large businesses with procurement pricing and overlapping functions and manufacturing efficiencies.”
The incremental revenue will be invested in research and development, products, and people, Cohen said.
The combined businesses did $2.5 billion in revenue in 2024 and $1.1 billion in EBITDA, Cohen said. Two thirds of that came from IGT.
“The combined entity will generate about half of its revenue from selling and leasing slot machines, but the other half will come from systems, fintech, cash access, igaming, and products for the online gaming business,” Cohen said. “That creates an attractive recurring-revenue profile.”
The business will have $450 million in cash and access to $750 million in liquidity.
Nicholas Khin, president of global gaming for IGT, will act as interim CEO, overseeing the integration of the merged companies. Hector Fernandez, the former CEO at Aristocrat who resigned in December, will lead the new IGT team later this year after his noncompete clause expires. Khin will then assume the position as CEO of their gaming business, Cohen said.
Management will comprise one-third of the team from IGT, one-third from Everi, and one-third from individuals from outside the gaming industry or from other businesses, Cohen said.
“We support management teams to execute on strategic direction, capital-allocation decisions, organizational resources, and recruiting the right team, but ultimately we don’t make day-to-day decisions for the company,” Cohen said. “That’s the job of our management teams. This investment will be no different than our involvement in the Venetian or any other gaming investments.”
Cohen told the Board to expect more investment from Apollo in the gaming industry in the future.
Everi’s legal counsel, Kate Lowenhar-Fisher, said the companies will learn a lot from each other. IGT is larger and has a more national footprint compared to the smaller footprint of Everi, which can teach them about the fintech business. The companies will keep their individual gaming licenses for the time being, she noted.
