Italian lottery company GTECH SpA is buying International Game Technology, a Las Vegas-based maker of casino equipment, in a deal valued at $6.4 billion, the companies said Wednesday.

Rome-based GTECH operates lottery games world-wide, including the Lotto game in Italy and several state lotteries in the U.S. The deal with IGT, which consists of $4.7 billion in cash and stock as well as $1.7 billion in IGT debt, will create a much larger global gaming company that covers multiple aspects of the gambling market, the firms said.

As a result of this transaction, GTECH and IGT will merge under a new holding company based in the U.K., they said.

Last month, GTECH said it had begun preliminary talks to buy IGT. But at the time, private-equity firm Carlyle Group was also in talks about buying IGT, a person familiar with the discussions told The Wall Street Journal.

The combined entity would have over $6 billion in revenue, the companies said. In April, IGT said its net income for the fiscal second quarter ended March 31 dropped 67% to $25.7 million from a year earlier, while revenue fell 15% to $513 million on weaker sales of slot machines.

Write to Juro Osawa at juro.osawa@wsj.com

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