IGT to merge its Global Gaming and PlayDigital businesses with Everi in $6.2B deal

International Game Technology (IGT) and Everi Holdings have entered into definitive agreements where IGT will spin off its Global Gaming and PlayDigital businesses and combine them with Everi to create a global gaming and fintech enterprise. Subject to regulatory approvals, the transaction is expected to close in late 2024 or early 2025.

Under the terms of the agreements, at closing, IGT shareholders are expected to own approximately 54% and Everi stockholders are expected to own approximately 46% of the shares in the combined company. The transaction has been approved unanimously by all voting members of the IGT Board of Directors and Everi Board of Directors. The deal values the combined businesses at approximately $6.2 billion on an enterprise value basis.

The business combination creates a comprehensive and diverse portfolio of land-based, digital, and fintech gaming products and services, the parties underscored. Vince Sadusky, IGT CEO, will lead the combined company with executives from both companies in key leadership roles. Fabio Celadon, current IGT EVP Strategy and Corporate Development will serve as CFO of the new entity. Randy Taylor, the current Everi CEO, will be a member of the combined firm's Board of Directors. Mark Labay, current Everi CFO, will assume the role of Chief Integration Officer.

Michael Rumbolz, Everi Executive Chairman, will be Chairman of the Board of Directors of the new company, which will have 11 total members including six independent directors as required by New York Stock Exchange listing standards. Six of the 11 members will be initially appointed by IGT, including CEO Vince Sadusky, and three of them will be appointed by De Agostini S.p.A., pursuant to an investor rights agreement. The balance of the directors will be initially appointed by Everi.

It should be noted that IGT Global Lottery will move forward operating entirely as a lottery company. 

Marco Sala, IGT Executive Chair of the Board, said: "As previously announced, IGT's Board of Directors embarked on a review of strategic alternatives for our Global Gaming and PlayDigital businesses as a way to unlock the intrinsic value of our portfolio of industry-leading assets. The transaction announced today is a key milestone in that process."

"The transaction will combine two robust gaming platforms with complementary capabilities, geographic footprints, and enhanced growth opportunities. It also facilitates the separation of IGT's Global Gaming and PlayDigital businesses from our Global Lottery business, resulting in a pure-play global lottery business. After closing, IGT's shareholders will continue to own one hundred percent of IGT's Global Lottery business, which is positioned for long-term success, and will own a majority of a combined company that offers global gaming, digital and fintech," he noted.

Marco Sala

Meanwhile, Vince Sadusky, IGT CEO, commented: "We are bringing together two businesses with complementary strengths that are stronger and more valuable together. The combination results in a comprehensive and diverse product offering, addressing more aspects of the gaming ecosystem across land-based gaming, iGaming, sports betting, and fintech."

"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," he explained.

Vince Sadusky

For his part, Michael Rumbolz, Everi Executive Chairman, added: "We believe this merger combines two highly complementary businesses in a transformational manner, creating a global, land-based, and digital gaming, fintech, and systems business. 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."

Michael Rumbolz

The transaction will be executed through a series of steps under which IGT will spin off a subsidiary owning its Global Gaming and PlayDigital businesses to IGT shareholders. That entity will then combine with Everi, with IGT shareholders receiving shares of Everi common stock and Everi continuing as the parent company.

IGT shareholders will receive approximately 103.4 million Everi shares, resulting in an approximate 54% ownership interest in the combined company with existing Everi stockholders owning the balance. After closing, Everi will change its name to International Game Technology and will trade on the NYSE under the ticker IGT.

In connection with the transaction, IGT will receive approximately $2.6 billion in cash that will be funded with the proceeds of debt incurred by the combined company. IGT expects to allocate approximately $2 billion to IGT debt repayment with the remaining amount allocated to separation and divestiture expenses, tax leakage, and general corporate purposes. The transaction implies an enterprise value for IGT’s Global Gaming and PlayDigital businesses of approximately $4 billion, and an enterprise value for Everi of approximately $2.2 billion.

Financing commitments of $3.7 billion, plus a $500 million revolver, are being provided by Deutsche Bank and Macquarie Capital to the combined company. Approximately $1 billion of the proceeds will be used to refinance Everi’s existing debt, approximately $2.6 billion of the proceeds will be distributed to IGT, and the remainder will be used to pay the combined company’s financing fees.

The merged entity is projected to have "an impressive financial scale," with pro forma 2024 revenue of approximately $2.7 billion and Adjusted EBITDA of around $1 billion. With a large installed base of approximately 70,000 electronic gaming machines (EGMs) generating substantial recurring revenues, the combined company boasts a compelling growth profile, noted the parties.

This offering includes a robust intellectual property portfolio, the opportunity to leverage IGT’s global sales team and distribution network to expand Everi’s reach, and approximately $85 million in identified cost savings and capital expenditure efficiencies.

The companies expect the balance sheet and cash flow generation will provide flexibility for further investments and return capital to stockholders. With a projected pro forma net debt to 2024 Adjusted EBITDA leverage ratio of 3.2-3.4x and a path to rapid de-leveraging, IGT and Everi expect to generate over $800 million of annual adjusted cash flow in the second year post-closing, including realized synergies. 

The transaction is subject to receipt of regulatory approvals, the approval by Everi stockholders and IGT shareholders, and satisfaction of other customary closing conditions, and is expected to close in late 2024 or 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. The spin-off of IGT’s Global Gaming and PlayDigital businesses is expected to be taxable to IGT shareholders for U.S. federal income tax purposes.