Global gaming technology suppliers IGT and Everi have agreed to a $6.2bn deal to merge the two businesses, while also spinning off IGT’s Global Lottery business as a separate entity controlled by the firm’s shareholders.

Under the terms of the agreements, slots giant IGT will separate its global gaming and PlayDigital businesses from the wider lottery division into a separate subsidiary, owned by IGT’s shareholders.

This entity will then combine with Everi, with IGT shareholders receiving 103.4 million shares in Everi common stock and Everi continuing as the parent company.

“The creation of separate gaming and lottery companies, each with experienced management teams and simplified business models, better positions each company to service customers and create significant value for stakeholders,” IGT CEO Vince Sadusky said in a Thursday announcement.

IGT shareholders will own 54% of the combined company, with Everi shareholders owning the remaining 46%. Upon closing of the deal, Everi will change its name to IGT for share trading purposes on the New York Stock Exchange (NYSE).

Gaming Giant Grows Bigger

Sadusky suggested the combination of the two businesses would result in in a business that was “stronger and more valuable” together than apart. 

He highlighted in the announcement how the merger would give the new corporate entity a comprehensive and diverse portfolio of high-performing land-based, digital and fintech gaming assets.

Everi executive chairman Michael Rumbolz celebrated the transformational nature of the merger of two “highly complementary” businesses.

“We expect the combined company will deliver a comprehensive range of products and services that will engage gaming patrons and drive efficiencies and revenues to our customers,” Rumbolz said.

IGT launched a strategic review into potential avenues to sell its PlayDigital and Global Gaming business in June 2023, ostensibly to “unlock the full value” of IGT's portfolio.

This included a potential sale, merger or spin-off, as well as retaining and further investment in the Global Gaming and PlayDigital businesses. 

Upon completion of the transaction, IGT's remaining operations will be comprised of its current Global Lottery business and corporate support functions.

IGT chairman Marco Sala will retain his role at the helm of the remaining businesses board of directors, with Max Chiara continuing as chief financial officer (CFO). 

The company’s remaining executive leadership will remain unchanged, with the exception of IGT’s current Global Gaming CEO Renato Ascoli, who will switch to become the CEO of the IGT global lottery business post-close.

Multibillion-Dollar Conglomeration

For its part, IGT will receive $2.6 billion in cash funded by proceeds of debt incurred by the combined company. 

Of this $2 billion will be allocated to repaying IGT’s debts with the remaining amount allocated to separation and divestiture expenses, tax leakage and general corporate purposes.

For transaction purposes, IGT’s Global Gaming and PlayDigital businesses are valued at a combined $4 billion, with Everi’s business valued at $2.2 billion.

International financiers Deutsche Bank and Macquarie Capital are providing $3.7 billion in financial commitments, plus a $500 million revolving loan facility to the combined group.

Of this, approximately $1 billion will be used to refinance Everi’s existing debts, the aforementioned $2.6 billion will be allocated to IGT, with the remainder used to pay financing fees incurred by the combined company.

Long-Term Vision, Leverages

Several factors arising from the merger of the two businesses were cited by both businesses as potentially generating long-term value for stockholders.

These include a comprehensive and diverse offering, as well as scaling up the firm’s finances. Cost savings of $85 million and opportunities for efficiencies in company capital expenditure have also been identified as compelling rationales behind the deal.

The merger is expected to generate over $800 million of annual adjusted cash flow in the second year following the closing, including realized business synergies.

The opportunity to leverage the global sales team and distribution network of IGT's Global Gaming and PlayDigital businesses to bring Everi's existing content and fintech solutions to customers outside the US was also highlighted as a potential value additive.

Widespread Support

IGT has confirmed that the merger transaction has been unanimously approved by both boards of directors, and will be passed for a wider shareholder vote scheduled later this year, ahead of a potential completion in late 2024-early 2025.

De Agostini S.p.A., which controls approximately 60% of the voting power of IGT shares, has entered into a voting and support agreement in connection with the transaction.

Post-closing, IGT’s current CEO Vince Sadusky will lead the combined company, whose leadership team will be made up of individuals from both entities.

Current IGT EVP Strategy and Corporate Development Fabio Celadon will serve as CFO of the combined company with Everi CEO Randy Taylor being appointed to the combined company’s board of directors.  

Current Everi CFO Mark Labay will assume the role of Chief Integration Officer. 

Everi’s executive chairman Michael Rumbolz will chair the combined company’s board of directors, which will be made up of six appointed by IGT, with a further five appointed by Everi.