LAS VEGAS, July 16, 2014 /PRNewswire/ -- International Game
Technology (NYSE:IGT), today announced that it has entered into a
definitive merger agreement with GTECH S.p.A. for the acquisition
of IGT by GTECH for $6.4 billion,
comprised of $4.7 billion in cash and
stock and the assumption of $1.7
billion in net debt.
The transaction will create the world's leading end-to-end
gaming company, uniquely positioned to capitalize on opportunities
in global gaming market segments. The new company combines
best-in-class content, operator capabilities, and interactive
solutions, joining IGT's leading game library and manufacturing and
operating capabilities with GTECH's gaming operations, lottery
technology and services. The merger drives competitive scale
across multiple businesses, geographies and product lines and is
expected to achieve over $280 million
in synergies.
Under the terms of the transaction, IGT and GTECH will combine
under a newly formed holding company organized in the United Kingdom (NewCo). IGT shareholders
will receive an aggregate value of $18.25 per IGT share in a combination of
$13.69 in cash plus 0.1819 ordinary
shares of NewCo for each share of IGT common stock, as described in
greater detail below. GTECH shareholders will exchange each
of their existing GTECH shares for one (1) newly issued NewCo
share.
"We are extremely pleased to reach a definitive merger agreement
with GTECH as a result of our exploration of strategic alternatives
to increase shareholder value. This outstanding combination
of two global leaders redefines the future of the gaming
industry. Together we are uniquely positioned to provide the
industry's broadest and most innovative portfolio of best-in-class
products, solutions and services," said Patti Hart, IGT CEO. "This strategic
agreement positions us to further transform the industry while
providing meaningful benefit and value to our customers, our
employees and our shareholders."
Commenting on the transaction, Marco
Sala, GTECH S.p.A. CEO said, "This transaction is
transformational for our business. With limited overlap in products
and customers, the combined company will enjoy leading positions
across all segments of the gaming landscape. It will increase
our global scale and with a full suite of offerings and robust
customer relationships across the client spectrum, the new company
will be uniquely positioned to take advantage of the ongoing
convergence across global gaming market segments. Our
expertise across these segments and greater ability to invest in
R&D will improve player experiences and benefit our government
and business clients. The transaction will significantly
enhance our cash flow and financial strength, and provide clear and
achievable cost and revenue synergies."
The transaction has been unanimously approved by the boards of
directors of both companies and represents a 46% premium to the
closing price of IGT's common stock on June
6, 2014, the last trading day prior to initial reports that
IGT was exploring a potential sale.
The combined entity would have over $6
billion in revenues and over $2
billion in EBITDA based on the last twelve trailing months
("LTM") as of March 31, 2014,
assuming a USD/EUR exchange rate of 1.36.1
Additional Transaction Details
The transaction will
include an election mechanism for IGT shareholders to elect
all-stock, all-cash, or mixed consideration subject to proration in
accordance with the terms of the merger agreement. Under certain
circumstances, the stock component of the consideration may be
received on a tax-deferred basis.
Assuming a mixed consideration election, the stock consideration
portion is subject to adjustment with a 15% up and down collar
based on the trading price of GTECH shares prior to the closing of
the transaction. The exchange ratio of IGT common stock for
NewCo stock will be determined by the average of the
volume-weighted average price of GTECH stock (converted to USD) on
ten randomly selected trading days occurring within the twenty
trading-day period ending on (and including) the second full
trading day prior to the closing of the transaction (the "GTECH
Share Trading Price"). If the GTECH Share Trading Price is
between or equal to $25.08 and
$28.84, the exchange ratio will vary between 0.1819x and
0.1582x. Above $28.84, the
exchange ratio will be fixed at 0.1582x. Between or equal to
$21.32 and $25.08, IGT shareholders will receive NewCo stock
at a fixed ratio of 0.1819x plus additional cash consideration up
to $0.68 per IGT share. Below
$21.32 IGT shareholders receive
0.1819 NewCo shares and additional cash consideration equal to the
GTECH Share Trading Price multiplied by 0.0321.
NewCo will have its corporate headquarters in the United Kingdom and maintain operating
headquarters in each of Las Vegas,
Providence and Rome. NewCo
will apply for listing solely on the New York Stock Exchange
(NYSE). IGT's shares will cease trading on the NYSE and
GTECH's shares will cease trading on the Borsa Italiana. It
is expected that NewCo will continue under the name GTECH plc.
De Agostini S.p.A. and its subsidiary DeA Partecipazioni S.p.A.,
holding in the aggregate approximately 59% of GTECH's outstanding
shares, have entered into a support agreement with IGT pursuant to
which they have agreed to vote in favor of the transaction.
As a result of the transaction, it is anticipated that existing
IGT and GTECH shareholders will own approximately 20% and 80%,
respectively, of NewCo ordinary shares and De Agostini is expected
to hold approximately 47% of NewCo's outstanding ordinary
shares2.
The transaction is currently expected to be completed in the
first or second quarter of 2015. The transaction is subject to the
receipt of required antitrust and gaming clearances, approval
by the IGT and GTECH shareholders, and other customary
conditions. GTECH expects to finance the cash portion of the
consideration through a combination of cash on hand and new
financing. In connection with entering into the transaction,
GTECH has received binding commitments totaling $10.7 billion from Credit Suisse, Barclays and
Citigroup to finance the transaction, including refinancing certain
existing indebtedness.
Governance
Upon the closing of the transaction, the
initial board of directors of NewCo will be comprised of 13
directors including Marco Sala,
GTECH's Chief Executive Officer, who will serve as the Chief
Executive Officer of NewCo; five directors to be appointed by IGT
from IGT's existing board of directors, including Phil Satre, IGT's Chairman, who will serve as
Chairman of NewCo, Patti Hart, IGT's
current Chief Executive Officer, who will serve as a Vice-Chairman,
and seven directors to be appointed by GTECH at least of four of
whom will be independent and one of whom will serve as a
Vice-Chairman. The NewCo Board will be compliant with the
listing standards of the NYSE applicable to non-controlled domestic
issuers.
In addition, NewCo will implement a loyalty share program that
will offer all NewCo shareholders (at the closing of the
transaction and thereafter) that hold their NewCo ordinary shares
continuously for at least three years following the closing, the
right to receive 0.9995 (non-transferable) special voting shares
per NewCo ordinary share.
Morgan Stanley & Co. LLC is providing financial advice, and
Sidley & Austin LLP and Allen & Overy LLP are acting as
legal advisors to IGT. Credit Suisse is providing financial
advice, and Wachtell, Lipton, Rosen & Katz, Clifford Chance LLP
and Lombardi, Molinari Segni are
serving as legal advisors to GTECH in connection with the
transaction.
Investor Call
IGT will hold an investor conference
call to discuss the combination today at 8:30 a.m. EDT. To access the call, please
use one of the following dial-in numbers: 877-891-6979 (U.S.
and Canada) and 773-756-4700
(International), passcode IGT.
A live broadcast of the conference call will be available online
by visiting IGT.com and clicking on the "Investor Relations"
tab. Related presentation materials will be posted to the
"Investor Relations" section prior to the call.
A telephone replay of the call will be available at
approximately 10:30 a.m. EDT on
Wednesday, July 16, 2014 until
Wednesday, July 30, 2014. The
replay dial-in numbers are 866-485-4162 (U.S. and Canada) and 203-369-1616
(International). In addition, the call will be archived on
the company's web site in the "Investor Relations" section.
About IGT
International Game Technology (NYSE: IGT) is
a global leader in casino gaming entertainment and continues to
transform the industry by translating casino player experiences to
social, mobile and interactive environments for markets around the
world. IGT's acquisition of DoubleDown Interactive provides
engaging social casino style entertainment to more than 6 million
players monthly. More information about IGT is available at IGT.com
or connect with IGT at @IGTNews or facebook.com/IGT. Anyone can
play at the DoubleDown Casino by visiting
http://apps.facebook.com/doubledowncasino or
doubledowncasino.com.
About GTECH
GTECH S.p.A. is a leading commercial
operator and provider of technology in the regulated worldwide
gaming markets, delivering best-in-class products and services,
with a commitment to the highest levels of integrity,
responsibility, and shareholder value creation. The Company is
listed on the FTSE MIB at the Milan Stock Exchange under the
trading symbol "GTK" and is majority owned by De Agostini S.p.A. In
2013, GTECH had approximately €3.1 billion in revenues and 8,600
employees with operations in approximately 60 countries. For more
information, please visit www.gtech.com.
Important Information for Investors and
Securityholders1
This communication is for
informational purposes only and is not intended to and does not
constitute an offer to sell or the solicitation of an offer to
subscribe for or buy or an invitation to purchase or subscribe for
any securities or the solicitation of any vote in any jurisdiction
pursuant to the proposed transactions or otherwise, nor shall there
be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended, and
applicable European regulations. Subject to certain exceptions to
be approved by the relevant regulators or certain facts to be
ascertained, the public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
NewCo will file with the SEC a registration statement on Form
S-4 or F-4, which will include the proxy statement of IGT that also
constitutes a prospectus of NewCo (the "proxy
statement/prospectus"). INVESTORS AND SECURITYHOLDERS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS, AND OTHER RELEVANT DOCUMENTS
FILED OR TO BE FILED WITH THE SEC, IN THEIR ENTIRETY CAREFULLY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT IGT, GTECH, NEWCO, THE PROPOSED TRANSACTIONS AND
RELATED MATTERS. Investors and securityholders will be able to
obtain free copies of the proxy statement/prospectus and other
documents filed with the SEC by the parties through the website
maintained by the SEC at www.sec.gov. In addition, investors and
securityholders will be able to obtain free copies of the proxy
statement/prospectus and other documents filed with the SEC on
IGT's website at IGT.com or within the "Investor Relations" section
or by contacting Investor Relations at 866-296-4232 (for documents
filed with the SEC by IGT) or on GTECH's website at gtech.com or by
contacting Corporate Communications at 401-392-7452 (for documents
filed with the SEC by NewCo).
The release, publication or distribution of this
communication in certain jurisdictions may be restricted by law and
therefore persons in such jurisdictions into which this
communication is released, published or distributed should inform
themselves about and observe such restrictions.
Participants in the Distribution
IGT, GTECH and NewCo
and their respective directors and executive officers may be deemed
to be participants in the solicitation of proxies from the
securityholders of IGT in respect of the proposed transactions
contemplated by the proxy statement/prospectus. Information
regarding the persons who are, under the rules of the SEC,
participants in the solicitation of the securityholders of IGT in
connection with the proposed transactions, including a description
of their direct or indirect interests, by security holdings or
otherwise, will be set forth in the proxy statement/prospectus when
it is filed with the SEC. Information regarding IGT's directors and
executive officers is contained in IGT's Annual Report on Form 10-K
for the year ended September 28, 2013
and its Proxy Statement on Schedule 14A, dated January 24, 2014, which are filed with the SEC
and can be obtained free of charge from the sources indicated
above.
Cautionary Statement Regarding Forward Looking
Statements
This press release contains forward-looking
statements (including within the meaning of the Private Securities
Litigation Reform Act of 1995) concerning IGT, GTECH, NewCo, the
proposed transactions and other matters. These statements may
discuss goals, intentions and expectations as to future plans,
trends, events, results of operations or financial condition, or
otherwise, based on current beliefs of the management of IGT and
GTECH as well as assumptions made by, and information currently
available to, such management. Forward-looking statements may be
accompanied by words such as "aim," "anticipate," "believe,"
"plan," "could," "would," "should," "estimate," "expect,"
"forecast," "future," "guidance," "intend," "may," "will,"
"possible," "potential," "predict," "project" or similar words,
phrases or expressions. These forward-looking statements are
subject to various risks and uncertainties, many of which are
outside the parties' control. Therefore, you should not place undue
reliance on such statements. Factors that could cause actual
results to differ materially from those in the forward-looking
statements include failure to obtain applicable regulatory or
securityholder approvals in a timely manner or otherwise; failure
to satisfy other closing conditions to the proposed transactions;
risks that the new businesses will not be integrated successfully
or that the combined companies will not realize estimated cost
savings, value of certain tax assets, synergies and growth or that
such benefits may take longer to realize than expected; failure to
realize anticipated benefits of the combined operations; risks
relating to unanticipated costs of integration; reductions in
customer spending, a slowdown in customer payments and changes in
customer demand for products and services; unanticipated changes
relating to competitive factors in the industries in which the
companies operate; ability to hire and retain key personnel; the
potential impact of announcement or consummation of the proposed
transactions on relationships with third parties, including
customers, employees and competitors; ability to attract new
customers and retain existing customers in the manner anticipated;
reliance on and integration of information technology systems;
changes in legislation or governmental regulations affecting the
companies; international, national or local economic, social or
political conditions that could adversely affect the companies or
their customers; conditions in the credit markets; risks associated
with assumptions the parties make in connection with the parties'
critical accounting estimates and legal proceedings; and the
parties' international operations, which are subject to the risks
of currency fluctuations and foreign exchange controls. The
foregoing list of factors is not exhaustive. You should carefully
consider the foregoing factors and the other risks and
uncertainties that affect the parties' businesses, including those
described in IGT's Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and other
documents filed from time to time with the Securities and Exchange
Commission (the "SEC") and those described in GTECH's annual
reports, registration documents and other documents filed from time
to time with the Italian financial market regulator (CONSOB).
Except as required under applicable law, the parties do not assume
any obligation to update these forward-looking statements.
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1 GTECH
reports its financial results under International Financial
Reporting Standards, while IGT reports its financial results under
U.S. Generally Accepted Accounting Principles.
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2 Assuming
that no withdrawal rights are exercised
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IGT Contacts:
Investor Relations Contact
Kate Pearlman
Vice President, Investor Relations and Treasury
+1 866-296-4232
Media Contacts
Susan Cartwright
Vice President, Corporate Communications
+1 702-669-8076
Phil O'Shaughnessy
Director Global Corporate Communications
+1 702-669-2975
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SOURCE International Game Technology