International Game Technology (IGT) has announced a strategic move to divide its lottery unit from its gaming businesses, which will subsequently merge with casino platform provider Everi Holdings to form a distinct entity valued at $6.2 billion, inclusive of debt.
The decision follows a comprehensive review of IGT’s two key units, Global Gaming and PlayDigital, which encompass gaming systems, iGaming, and sports betting. By separating the lottery operations, which contribute over half of its revenue, IGT aims to enable the standalone business to concentrate solely on its lottery operations.
IGT’s management has previously expressed concerns that the intrinsic value of its businesses was not adequately reflected in its stock price, prompting a reassessment of strategic options.
Vince Sadusky, IGT CEO, said: “The combination results in a comprehensive and diverse product offering, addressing more aspects of the gaming ecosystem across land-based gaming, iGaming, sports betting, and fintech.”
Under the terms of the agreement, IGT shareholders are expected to retain approximately 54 percent ownership in the combined entity, with Everi stockholders holding the remaining stake. The transaction will involve a taxable spin-off to IGT shareholders, followed by a merger with Everi.
Everi, a provider of gaming content, machines, and services to both land-based and digital casinos, stands to benefit from the merger. Truist analyst Barry Jonas views the deal as an opportunity to establish a formidable gaming tech powerhouse, albeit without significant premiums attached to either business, Reuters news report said.
The combined company will adopt the name International Game Technology. IGT CEO Vince Sadusky will assume leadership of the merged Las Vegas-based entity, while a new CEO will oversee the lottery business.
Despite the benefits, Truist’s Jonas highlights significant risks associated with the deal, including the protracted regulatory approval process. However, IGT anticipates cost savings of approximately $85 million post-merger, with projected pro forma revenue for 2024 reaching $2.7 billion.
