International Game Technology has inked a definitive agreement regarding the sale of its Lottomatica business to Gamenet Group, a subsidiary of funds managed by an affiliate of global alternative investment manager Apollo Global Management.
The firm says that proceeds from the sale of its Italian B2C gaming machine, sports betting, and digital gaming businesses will be primarily used for debt reduction, as IGT focuses the core competency of its global gaming segment as a B2B service provider.
The board of directors of IGT has unanimously approved the transaction, which remains subject to customary closing conditions, including regulatory approvals. IGT expects that the sale will close in the first half of 2021.
“The transaction enables IGT to monetise its leadership positions in the Italian B2C gaming machine, sports betting, and digital spaces at an attractive multiple to comparable Italian transactions, providing us with enhanced financial flexibility,” explained Marco Sala, CEO of IGT.
“Aligning with our recent reorganisation, the favourable rebalancing of our business and geographic mix reframes and simplifies our priorities while improving the company’s future profit margin, cash flow generation, and debt profile.”
The sale price is €950m, with €725m payable at closing, €100m payable on December 31, 2021, and the remaining €125m payable on September 30, 2022. The deferred payments are not subject to any conditions other than closing, and are secured by an equity commitment letter from the Apollo-managed funds.
The businesses being sold generated approximately €207m in aggregate adjusted EBITDA in 2019, ‘placing the transaction in the upper band of valuation ranges achieved by the most recent Italian benchmarks’.
In its third quarter report issued last month, IGT documented that revenue during the period fell 15 per cent from $1.15bn to $982m, with the firm’s global lottery division coming in at $570m, up three per cent and driven by double-digit growth in North America same-store sales.