International Game Technology (IGT) and its wholly-owned subsidiary, Lottomatica Holding, has agreed to sell 100% of its share capital of Lottomatica Videolot Rete and Lottomatica Scommesse to Gamenet Group, a subsidiary of funds managed by an affiliate of Apollo Global Management.
Lottomatica Videolot Rete S.p.A. and Lottomatica Scommesse S.r.l. are members of the IGT group which conduct its Italian B2C gaming machine, sports betting, and digital gaming businesses.
The transaction values the businesses being sold at an enterprise value of approximately €1.1bn. The businesses being sold generated about €207m in aggregated, adjusted EBITDA in 2019, placing the transaction in the upper band of valuation ranges achieved by the most recent Italian benchmarks.
Marco Sala, CEO of IGT, said: “The transaction enables IGT to monetize its leadership positions in the Italian B2C gaming machine, sports betting, and digital spaces at an attractive multiple to comparable Italian transactions, providing us with enhanced financial flexibility.
“Aligning with our recent reorganization, the favorable rebalancing of our business and geographic mix reframes and simplifies our priorities while improving the company’s future profit margin, cash flow generation, and debt profile.”
Gamenet has agreed to a sale price of €950m, with €725m payable at closing, €100m payable on December 31, 2021, and the remaining €125m payable on September 30, 2022.
The deferred payments are not subject to any conditions other than closing and are secured by an equity commitment letter from the Apollo-managed funds. IGT will use net proceeds from the transaction primarily to reduce debt.
IGT’s Board of Directors has unanimously approved the transaction, which remains subject to customary closing conditions, including regulatory approvals, and it expects the transaction will close in the first half of 2021.