IGT Asset Sales Could Draw Interest from European Suitors

Posted on: June 15, 2023, 11:04h. 

Last updated on: June 15, 2023, 11:25h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Last week, International Game Technology (NYSE: IGT) announced it is considering strategic alternatives for its digital content and global gaming businesses as the company shifts its focus to its high-margin lottery unit.

IGT
A bank of Wheel of Fortune slot machines. Manufacturer IGT could draw plenty of interest in sales of its slots and digital gaming units. (Image: TheStreet.com)

IGT’s slot machine business, which is one of the three largest in North America and includes the iconic Wheel of Fortune series, has at least one prospective bidder. In a statement released earlier this week, gaming industry veteran Gary Green said he put together a private equity group, including Chinese investors and tribal casino operators, to bid for IGT’s slot machine business.

We have reached the point that our new Private Equity entity can present a Highly Confident Letter and several strategic possibilities that we believe will appeal to IGT’s shareholders and potentially win the endorsement of Deutsche Bank, Macquarie Capital, and Mediobanca – the company’s financial advisors,” said Green in a statement.

Green, who previously served as vice president of Trump Hotels & Casinos, was instrumental in getting IGT into the tribal casino market 20 years ago.

Other Buyers for IGT Assets Could Have European Flare

IGT’s Play Digital unit, which includes an internet casino entity and a business-to-business sports wagering platform, is likely to draw ample interest from suitors. Analysts speculate that the business would be broken up into two in a sale, with prospective buyers possibly displaying more enthusiasm for the iGaming arm.

“The online casino arm is a significantly more attractive asset in our view, with IGT games accounting for 17.4% of U.S online casino GGR,” according to Eilers & Krejcik Gaming (EKG) in the latest edition of the EKG Line report. “That’s behind only Evolution (and its near-monopoly on live casino) and ahead of Light & Wonder in third place at 16.2% share.”

The research firm believes Sweden-based Evolution is a logical buyer for IGT’s internet casino unit because that company is looking to bolster its online casino footprint in the US.

As for the sports wagering unit, that too is likely to draw interest from European suitors, not domestic clients such as Circa, Maverick Sports, SuperBook, Betly, and Sportsbook Rhode Island.

“A buyer is more likely to come from the other side of the Atlantic, where partners include LNB (Belgium), OPAP (Greece), and Lottomatica (Italy),” added EKG.

IGT Attempting to Unlock Shareholder Value

Following the sale of its Italian digital gaming, gaming machine, and sports wagering operations to Gamenet Group S.p.A for $1.15 billion in late 2020, IGT depended on the lottery for the majority of its earnings.

While the digital and gaming units are growing, they don’t yet account for a significant portion of IGT earnings and the growth ascribed to those entities isn’t adequately reflected in IGT’s share price, indicating there could be merit in selling or spinning off those segments.

“Management noted its belief that the intrinsic value of the company’s market-leading businesses and diversified cash-flow profile is not currently reflected in the stock price and that the timing is right to assess opportunities that may enhance value for IGT’s shareholders,” wrote Macquarie analyst Chad Beynon in a note out last week.