IGT to Reestablish Presence in Las Vegas Following Major Acquisition
IGT is preparing to make a comeback in Las Vegas after a significant $6.3 billion acquisition by Apollo Global Management. This transaction merges IGT’s gaming and digital operations with Everi Holdings, forming a new entity that will be based in Nevada. The Nevada Gaming Commission has given its unanimous approval to the licensing, paving the way for the deal to finalize, pending final consent from the New York State Gaming Commission, which is anticipated to occur this Tuesday. Apollo, a veteran investor in Nevada’s gaming landscape, including ownership of The Venetian and Palazzo resorts, will oversee the new company operating under the IGT name. The IGT brand, which exited Las Vegas in 2015 when it was acquired by Italy’s Gtech Holdings, is set to return as part of a strategy to develop what it terms a “scaled gaming-technology-platform company.”
Details of the Acquisition and Future Plans
The acquisition, facilitated through the holding entity Voyager Parent LLC, will integrate IGT’s gaming and digital sectors while fully acquiring Everi, a publicly traded company. Upon completion of the transaction, the original IGT will be rebranded as Brightstar Lottery, retaining its global lottery operations, which include a significant Italian presence. During a public hearing, Apollo partner Daniel Cohen and compliance officer Kate Lowenhar-Fisher elaborated on the deal and future aspirations for the company. Cohen emphasized the critical role Nevada plays in their business strategy, highlighting that the combined operations of IGT and Venetian will generate over 11,000 jobs and contribute $2.5 billion in annual revenue to the state. He outlined Apollo’s commitment to long-term value enhancement, stating that the firm gathers investments from pension funds, institutional investors, endowments, and affluent individuals, with a focus that transcends quarterly results. “Our primary aim is to foster long-term value creation and implement substantial improvements in the companies we manage,” he noted. “This transaction has been a long time coming.”
Leadership and Structural Organization of the New Entity
Nicholas Khin, IGT’s president of global gaming, will initially take on the role of interim CEO for the newly formed company. Once a non-compete agreement expires later this year, Hector Fernandez, the former CEO of Aristocrat Gaming, is set to assume the CEO position, while Khin will return to lead the gaming division. The newly merged entity will operate across three key sectors: digital, gaming, and fintech. Cohen anticipates that the organization will achieve $2.6 billion in annual revenue and $1.1 billion in EBITDA, with over 80% of the revenue coming from recurring sources. “This diverse product mix ensures a recurring revenue framework, offering a reliable stream of income and cash flow to reinvest in the business and reduce debt,” he explained.
Future Growth and Financial Outlook
Cohen also hinted at the possibility of an initial public offering (IPO) in the next three to five years, noting that Apollo has successfully secured $4.3 billion in debt and $2.4 billion in equity to finance the acquisition. This funding includes a $1.3 billion investment from Apollo’s Fund 10, $820 million from co-investors, and $275 million from IGT’s major stakeholder, the De Agostini family. The new organization is projected to launch with over $1 billion in liquidity. While acknowledging that some integration between IGT and Everi might lead to consolidation, Cohen emphasized that the primary objective is to generate value rather than implement widespread layoffs. “Our goal is to significantly enhance our companies,” he stated, citing the firm’s successful management of The Venetian.
Shareholder Benefits and Market Positioning
Under the terms of the acquisition, Everi shareholders will receive $14.25 per share in cash, representing a 56% premium over the company’s closing stock price as of July 25, 2024. Meanwhile, IGT expects to gain $4.05 billion in gross cash proceeds, which will be allocated towards debt repayment and returning capital to shareholders. With approvals granted in 36 jurisdictions over the past 11 months, the new entity is now well-positioned to compete directly with major industry players such as Light & Wonder and Aristocrat. Both Commissioner George Markantonis and Brian Krolicki expressed confidence in Apollo’s ability to lead the new IGT, citing the firm’s successful management of The Venetian as a reassuring precedent.
