Combines #1 Global Lottery Business with #1
Global Gaming Equipment Company
New Company to Have Scale Across All
Businesses, Geographies and Product Lines
Expects to Achieve over $280 Million in
Synergies
Transaction Accretive to Cash Earnings in
First Year
GTECH S.p.A. (MIL:GTK), the Italy-based leader
in worldwide regulated gaming, today announced that it has entered
into a definitive merger agreement with International Game
Technology, Inc. (NYSE: IGT), a global leader in casino and social
gaming entertainment, headquartered in Las Vegas, Nevada, U.S.A.
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 a combination of
$13.69 in cash plus 0.1819 NewCo shares (subject to adjustment) for
each share of IGT common stock, equal to an aggregate value of
$18.25 per IGT share. GTECH shareholders will exchange each of
their existing GTECH shares for one (1) newly issued ordinary share
of NewCo. The aggregate transaction value is approximately $6.4
billion inclusive of the assumption of approximately $1.75 billion
in existing IGT net debt.
The transaction creates the world’s leading end-to-end gaming
company, uniquely positioned to capitalize on opportunities across
global gaming market segments. The new company combines
best-in-class content, operator capabilities, and interactive
solutions, and joins IGT’s leading game library and manufacturing
and operating capabilities with GTECH’s gaming operations, lottery
technology and services. The agreement drives scale across all
businesses, geographies and product lines and is expected to
achieve more than $280 million in run-rate synergies by the third
year following closing of the transaction.
Commenting on the transaction, Marco Sala, Chief Executive
Officer of GTECH S.p.A. 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 have
unparalleled capabilities to address the ongoing convergence across
global gaming 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.”
“We are extremely pleased to reach a definitive merger agreement
with GTECH as a result of our exploration of strategic alternatives
to maximize shareholder value. This outstanding combination of two
global leaders truly defines the future of gaming entertainment.
Together we are uniquely positioned to provide the industry’s
broadest and most innovative portfolio of best-in-class products,
solutions and services. This strategic agreement positions us to
further transform the industry while providing meaningful benefit
and value to our customers, employees and shareholders,” said Patti
Hart, IGT CEO. “Our dedicated employees’ commitment and innovation
have enabled us to capitalize upon this opportunity, and we look
forward to integrating with the GTECH team to achieve even greater
levels of success.”
The combined entity would have more than $6 billion in pro forma
revenues and in excess of $2 billion in pro forma EBITDA based on
the last twelve trailing months as of March 31, 2014 at current
exchange rates1. The combined entity is expected to generate
significant free cash flow and the transaction will be accretive on
a cash earnings per share basis immediately.
Additional Transaction Details
The stock component of the purchase price is subject to
adjustment with a 15 percent up and down collar based on the
trading price of GTECH shares prior to the closing of the
transaction, with any increase in consideration payable to IGT
stockholders to be paid in cash. The transaction will include an
election mechanism for IGT shareholders to elect all-stock,
all-cash consideration or a mixed election, subject to proration in
accordance with the terms of the merger agreement.
IGT and GTECH will combine under a newly formed UK holding
company with its corporate headquarters in the United Kingdom and
operating headquarters in each of Las Vegas, Providence and Rome.
NewCo will be solely listed on the New York Stock Exchange (NYSE).
IGT’s shares will cease trading on the NYSE and GTECH’s shares will
cease to trade on the Italian Stock Exchange (Borsa Italiana).
Immediately before the GTECH-NewCo merger is completed, GTECH
will transfer its Italian business into wholly-owned Italian
subsidiaries which, after the merger, will become subsidiaries of
NewCo.
De Agostini S.p.A. and its subsidiary DeA Partecipazioni S.p.A.,
holding in the aggregate approximately 59 percent of GTECH’s
outstanding shares, have entered into a support agreement with IGT
pursuant to which they have committed with IGT to vote in favor of
the transaction and undertaken certain lock-up commitments. Certain
undertakings qualifying as a “shareholders agreement” with respect
to GTECH, will be published in accordance with Article 122 of the
Italian Unified Financial Act and implementing regulations.
As a result of the transaction, it is anticipated that existing
IGT and GTECH shareholders will own approximately 20 percent and 80
percent, respectively (assuming no withdrawal rights are
exercised), of NewCo’s ordinary shares and De Agostini is expected
to hold approximately 47 percent of NewCo’s outstanding ordinary
shares.
The transaction, which has been approved by the boards of
directors of both companies, 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 each of the IGT and GTECH shareholders, and other
customary conditions. The GTECH-NewCo merger will trigger the
withdrawal right of GTECH shareholders not approving the
transaction in the meeting of GTECH shareholders. GTECH can
terminate the Merger Agreement and not proceed to the closing of
the transaction, inter alia, in the event that withdrawal rights
are exercised in excess of 20 percent of GTECH share capital. 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 three additional independent directors and six
directors to be appointed by De Agostini, at least four of whom
will be independent and one of whom will serve as a Vice-Chairman
and one independent director mutually agreed by GTECH and IGT.
NewCo will comply with NYSE corporate governance listing standards
applicable to non-controlled, U.S. domestic issuers. The UK
Takeover Panel has confirmed that NewCo will not be subject to the
UK Takeover Code.
In addition, to encourage long-term share ownership and to
facilitate the realization of the benefits to be achieved through
the combination, 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, the right to receive 1
(non-transferable) special voting share per NewCo ordinary share
carrying 0.9995 votes per share.
Credit Suisse is acting as lead financial advisor to GTECH and
left lead arranger and bookrunner for the acquisition financing for
the transaction; Barclays and Citigroup are also financial advisors
to GTECH and, together with Credit Suisse, are acting as joint lead
arrangers, joint bookrunners and co-syndication agents of the
acquisition financing.
Wachtell, Lipton, Rosen & Katz, Clifford Chance LLP and
Lombardi Molinari Segni are serving as legal advisors to GTECH in
connection with the transaction. Morgan Stanley is providing
financial advice, and Sidley & Austin LLP and Allen & Overy
are acting as legal advisors to IGT.
Investor Call
GTECH will hold an investor conference call to discuss the
combination today at 2:00 a.m. (Eastern Time). To access the call,
please use one of the following dial-in numbers: 877-546-5018 (U.S.
and Canada), 39 0666053188 (Italy) and 857-244-7550
(International), and enter the Conference ID number: 84883561.
A live broadcast of the conference call will be available online
by visiting GTECH.com and clicking on the “Investor Relations” tab
on its website, or by visiting
http://edge.media-server.com/m/p/fhpycz96/lan/en. Related
presentation materials will be posted to the company’s “Investor
Relations” section in Adobe Acrobat format prior to the call.
A telephone replay of the call will be available until July 23,
2014. The replay dial-in numbers are 888-286-8010 (U.S. and Canada)
and 617-801-6888 (International), and the Conference ID number is
68896648.In addition, the call will be archived on the companies’
web sites in the “Investor Relations” sections.
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 Italian
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.
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.
The company had revenues of $2.34 billion and adjusted EBITDA of
$842.6 million as of fiscal year end 2013. 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
Important Information for Investors and Shareholders
This communication 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
F-4, which will include the proxy statement of IGT that also
constitutes a prospectus of NewCo (the “proxy
statement/prospectus”). INVESTORS AND SHAREHOLDERS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS, AND OTHER RELEVANT DOCUMENTS
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 shareholders 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 shareholders will be
able to obtain free copies of the proxy statement/prospectus and
other documents filed with the SEC by the parties by contacting
Investor Relations, IGT (for documents filed with the SEC by IGT)
or Investor Relations, GTECH (for documents filed with the SEC by
NewCo).
Italian CONSOB Regulation No. 17221
Pursuant to Article 6 of the CONSOB Regulation no. 17221 of
March 12, 2010 (as amended, the “CONSOB Regulation”), NewCo is a
related party of GTECH, being a wholly owned subsidiary of
GTECH.
The merger agreement providing for the GTECH-NewCo merger –
which exceeds the thresholds for “significant transactions”
pursuant to the Regulation – was approved [unanimously] by the
GTECH board of directors.
The merger agreement and] the GTECH-NewCo merger are subject to
the exemption set forth in Article 14 of the CONSOB Regulation and
Article 3.2 of the “Disposizioni in materia di operazioni con parti
correlate” (“Procedures for transactions with related parties”)
adopted by GTECH on July 28, 2011 and published on its website
(www.gtech.com). Pursuant to this exemption, GTECH will not publish
an information document (documento informativo) for related party
transactions as provided by Article 5 of the CONSOB Regulation.
Prior to the meeting of GTECH shareholders, GTECH will publish an
information document pursuant to Article 70, paragraph 6, of the
CONSOB Regulation on Issuers (CONSOB Regulation no. 11971 of May
24, 1999, as amended), in accordance with applicable terms.
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 shareholders 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
shareholders 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.
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 shareholder 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. Nothing in this announcement is intended, or is to be
construed, as a profit forecast or to be interpreted to mean that
earnings per GTECH share or IGT share for the current or any future
financial years or those of the combined group, will necessarily
match or exceed the historical published earnings per GTECH share
or IGT share, as applicable.
1 Assumes a USD/EUR exchange rate of 1.36. GTECH reports its
financial results under International Financial Reporting
Standards, while IGT reports its financial results under U.S.
Generally Accepted Accounting Principles.
Sard Verbinnen & Co.Stephanie Pillersdorf/Margaret
Popper/Carissa Felger, 212-687-8080orGTECH S.p.ASimone Cantagallo,
(+39) 06 51899030