From it’s humble beginnings in West Greenwich, Rhode Island, to its acquisition by Italian lottery giant, Lottomatica in 2006, to a planned merger announced today with International Game Technology (IGT) GTECH is poised to become the biggest and most influential gambling company in the world. As currently structured, IGT shareholders would own 20% and GTECH shareholders will own 80% of the new company.
Combining the two companies would consolidate two industry leaders with very little overlap in products and services. IGT’s game library is distributed via non-US facing online casinos and in land casinos worldwide (including Italy). GTECH primarily services lotteries in over 100 countries (including the U.S.) and has employees in 52 countries. Both companies currently manufacture and supply physical machines as well as server based solutions for land casinos.
Although the deal has been approved by the boards of directors of both companies, it still needs regulatory and antitrust approval as well as approval by the shareholders of both companies. De Agostini S.p.A. and its subsidiaries currently hold nearly 60% of GTECH (and its subsidiary’s) shares. IGT shareholders would receive all-stock, all-cash, or a mixed election of their choosing. According to business reports, GTECH has already secured nearly $11 billion in binding commitments for the deal which appears to be worth $6.4 billion including debt.
The antitrust question is better left to legal minds versed in the complexities of monopoly systems, but for the most part it appears to not be a significant problem. GTECH has several subsidiaries that could be spun off in negotiations if conflicts of interest were to emerge. IGT and GTECH (under the trade name Spielo) do share considerable floor space in the American casino market, but these are nearly all lottery system casinos. The main GTECH competitor in this arena is Scientific Games, who recently acquired IGT competitor and long time American slot machine developer and manufacturer, Williams Gaming (WMS).
The new company would be headquartered in the United Kingdom. Reports indicate that it would not be subject to the UK Takeover Code. IGT shares would stop trading on the New York Stock Exchange and GTECH would delist from the Italian Stock Exchange. The new company would list on the NYSE.
However, one should look at how GTECH has exercised their monopolies in the past before assuming that there will be easy or swift regulatory approval.