IGT and Everi are combining forces via acquisition by Apollo Global Management in a deal approved Thursday by the Nevada Gaming Commission. The $6.3 billion transaction is scheduled to close Tuesday.
The deal allows Apollo, owner of the Palazzo, Venetian, and Venetian Expo in Las Vegas, to acquire IGT’s gaming and digital business and Everi, and combine them into a single enterprise. Apollo said the company will explore an IPO in the future with the new IGT, possibly in the next three to five years.
Brin Gibson, legal counsel for the holding company Voyager Voteco LLC, called it a “simple two-step transaction,” in which Apollo will acquire all gaming and digital businesses from IGT. It will then acquire publicly traded Everi Holdings. Voyager is owned by three entities: Apollo Managed Fund 10, Apollo co-investors, and a major shareholder of IGT, the De Agostini family.
“While these three groups intend to provide equity funding for the proposed transitions, control of the Voyager structure will stay with (Apollo partners),” Gibson said.
Nicholas Khin, president of global gaming for IGT, will act as interim CEO, while Hector Fernandez, the former CEO at Aristocrat who resigned that company in December, will lead the new IGT team later this year after his non-compete clause expires.
Daniel Cohen, a partner at Apollo, told the Commission that his company’s investments have spanned more than two decades in every aspect of the gaming industry. Between the new IGT and the Venetian, they will have 11,000 employees in Nevada with more than $2.5 billion in revenue generated in the state. “Nevada is critically important to our business and go-forward plans.”
Cohen described private-equity involvement as the firm raising money from pension funds, institutional investors, endowments, and high net-worth individuals to grow the business and sell at a profit.
“We’re not beholden to quarter-to-quarter results when we make our investments. That’s why we typically take companies private — to generate value creation in a private setting, maximize value, and not have to deal with stock fluctuations and short-term measures,” Cohen said. “Our sole focus is driving long-term value creation and making meaningful improvements in the companies we oversee.”
Cohen said he’s followed IGT and the slot business for more than a decade, so the transaction “was a long time in the making.” In July 2024, the transaction was announced, superseding a stock merger between IGT and Everi. The new company will be called IGT and be headquartered in Las Vegas.
The new IGT will have three divisions: digital, gaming, and fintech.
Cohen said they want to create a “scaled gaming-technology-platform company with actionable levers to create upside volatility for growth. We’re combining two franchise assets with complimentary portfolios to build world-class leaders across gaming systems, fintech, igaming, and payments.”
The combined business has a margin profile that’s well below peers and Cohen said they’re looking to close that gap under their ownership, generate incremental cash flow, and deliver higher-technology products to customers.
“The breadth of the platforms means we have a variety of upside opportunities to grow the businesses meaningfully, develop high-quality content, and compete with the two other large competitors in the space (Light & Wonder and Aristocrat),” Cohen said.
The combined business will do $2.6 billion in revenue and $1.1 billion in EBITDA. About two-thirds of that comes from the existing IGT business and one-third from Everi.
“This product mix creates a recurring revenue profile of over 80% of the business having recurring-like features,” Cohen said. “That was important for us and why we were so excited about the opportunity. It provides us a stable source of revenue and cash flow to invest in the business and pay down debt.”
The acquisitions are funded through a combination of debt and equity. The $4.3 billion in debt was raised earlier this month, Cohen said. The $20 billion Apollo Fund 10 is investing $1.3 billion, which will be one of the largest investments in that fund.
“That shows you the conviction we have in the business here,” Cohen said. “We raised another $820 million or so from co-investors and the De Agostini family, who we’ve done business with for over a decade, will be investing $275 million. The business will be incredibly well capitalized at close, with over a $750 million revolver, more than $400 million in cash, and over $1 billion in liquidity, really important to accelerate some of the transformation.”
Cohen said it’s been a busy 11 months and they’ve been preparing both companies for the integration since the announcement. They recruited a talented team over the past year to operate the business. “The focus of the last year was recruiting the management team that has the same shared vision as us and creating the IGT of the future.”
When it comes to private equity, Cohen said people shouldn’t look to owners to make cuts. The industry has become more developed over the last decade, with a lot of capital looking for investments. “(To generate returns), we have to make our companies substantially better and hopefully you’ve seen the work we’ve done at the Venetian.”
Commission member George Markantonis said he had no problem giving his approval, considering how well Apollo has operated the Venetian.
Commissioner Brian Krolicki also said the experience with the Venetian is formative to what the Commission is considering on the IGT and Everi deal.
Cohen said at some point, there will be some consolidation of positions between the two companies where there are duplications, but that’s not the goal. Over time as they recruit talent, Apollo will issue 7.5% to 10% of the company to employees and management-team members.
Under the terms of the new agreements, Everi stockholders will receive $14.25 per share in cash, representing a 56% premium over Everi’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 proceeds to be used to repay debt and to be returned to shareholders.
