The deal will see Apollo spin off IGT’s gaming business and merge it with casino technology and payments specialist supplier Everi under one combined enterprise.
Everi shareholders will receive $14.25 per share in cash, representing a 56% premium over Everi’s closing share price on 25 July, while IGT will receive $4.05bn in cash. This values the transaction at approximately $6.3bn.
IGT-Everi: Sound familiar?
The deal comes with a merger of the two businesses already in motion. In February IGT announced plans to merge the Global Gaming and PlayDigital businesses with Everi to create a “comprehensive and diverse” global enterprise.
The transaction with the Apollo funds has the unanimous approval of an IGT board special committee and the backing of Everi’s board of directors. As a result the previous transaction agreement between IGT and Everi is terminated.
That previous agreement would have seen the expanded business trade under the IGT name on the New York Stock Exchange. Instead it will be delisted, although the legacy IGT lottery business – which doesn’t form part of the transaction – will continue as a listed business under a new brand. De Agostini SpA, IGT’s previous majority shareholder, will retain a minority stake in the enlarged IGT-Everi business.
Apollo partner Daniel Cohen said the business would be “even better positioned under private ownership to capture the opportunities ahead to grow and create value”.
The combination creates “a leading, diversified solutions provider that is well positioned across the entire gaming ecosystem,” Cohen said. “As an active investor in the gaming and leisure sector for many years, we have long admired both companies and their highly talented teams.”
Change of leadership plans
The original deal also positioned current IGT chief executive Vince Sadusky as leader of the new entity. Those plans have changed.
Now Sadusky will oversee the separation of the gaming operations and support the transition through to the deal’s close. He then stays on as CEO of the lottery business.
Mike Rumbolz, Everi’s executive chairman, was also due to stay on as chair of the new entity. There is no mention of him in the Apollo announcement.
The leadership of the IGT-Everi business isn’t quite clear, although two key personnel will stay on. IGT executive vice-president of strategy and corporate development Fabio Celadon becomes chief financial officer, with Everi CFO Mark Labay named chief integration officer. The new business will be headquartered in Las Vegas.
A “positive evolution” of the IGT-Everi deal
The new agreement represents “a positive evolution” of the previous transaction, according to Sadusky.
“With the Apollo Funds, we have found a partner that recognises the strength of IGT Gaming, the value of our talent and our position in the industry. This transaction will allow IGT Gaming to continue to invest in and enhance its growing core segments while providing customers with a more comprehensive portfolio of offerings.”
For Everi president and CEO Randy Taylor, the updated deal maintains the integrity and strategic rationale of the original, but provides “significant and certain value” for shareholders.
“Apollo is a respected investment firm with a strong track record in the gaming sector and they recognise the value of our business and see significant potential in bringing IGT Gaming and Everi together.
“Under private ownership, we believe we will be better positioned to accelerate the integration of our two organisations for the benefit of our customers and employees.”
Following the announcement, IGT will announce its first half results and hold an investor call on 30 July as planned. Everi, on the other hand, will release its results by 9 August, but with no call to take place.
Shares in Everi shot up 40.15% in pre-market trading to $12.81 per share following the news, with IGT trading up 16.57% at $23.50 per share in New York before markets opened.