Scientific Games Wednesday announced that it has withdrawn its previously announced all-stock offer to acquire the remaining 19% equity in SciPlay that it does not currently own.
Scientific Games previously announced the proposal to take its equity ownership of SciPlay, a developer and publisher of digital games on mobile and web platforms, from 81% to 100% on July 15.
“In line with our approach to capital management and disciplined M&A we have decided that continuing to pursue this opportunity would not be prudent for our shareholders at this time,” said Barry Cottle, President and Chief Executive Officer of Scientific Games in a press release.
Analyst Barry Jonas of Truist Securities stated that “while we do think it would make more sense for Scientific Games to own 100% of SciPlay, we also think this development speaks to management’s discipline and belief it’s shares are currently undervalued.”
The offer to merge with SciPlay would have resulted in SciPlay shareholders receiving 0.25 shares of SGMS stock for each share of SciPlay stock, however, “Scientific Games and the SciPlay’s special committee were unable to agree upon the offer price of 0.25 SGMS shares per SCPL share, issued when SGMS was trading at ~$68 vs. its current ~$62,” said Jonas.
Scientific Games will retain its 81% economic interest and 98% voting interest in SciPlay.
“SciPlay remains a strategic asset and has the opportunity to drive meaningful value as it grows its social casino market share and expands into the $20B casual genre leveraging its expertise in engagement and monetization. We will continue to invest in this sector in a disciplined manner,” added Cottle.
In a simultaneous 8-K filing with the SEC, Scientific Games announced Jack A. Markell would be resigning from its board of directors effective December 31, to serve as the U.S. Representative to the Organisation for Economic Co-operation and Development, with the rank of Ambassador.
In its third-quarter SciPlay recently topped Street forecasts in earnings per share but fell short of estimates in growing revenue. Revenue fell 3.4% to $146.6 million from $151.2 million and missed the $154.4 million average forecast of Seeking Alpha-polled analysts.
Scientific Games is currently in the process of offloading its lottery business to Brookfield Business Partners for $6.05 billion and earlier in December closed on an acquisition of ACS’s cashless table game solution.
