IGT Gaming and Everi, two of the most prolific slots brands on US casino floors, are poised to unite under one roof in a deal brokered by Apollo Global Management. Apollo, or rather funds managed by its affiliates, will create a new holding company to serve as the parent for both businesses.
The two companies announced their plans for a merger in late February. However, the original terms would have resulted in a publicly traded combined company under joint ownership of the original shareholders. That was unappealing to some investors due in part to potential regulatory concerns. Apollo’s involvement means the combined company will be under private ownership while existing shareholders will receive a cash payout.
The new deal will see Everi leave public markets entirely. Those holding $EVRI stock (Everi Holdings Inc 14,23 +0,07%) will receive $14.25 per share in cash. With 84 million shares outstanding, that implies a market valuation of $1.2 billion for the business and a $2.2 billion enterprise value after accounting for its $1 billion in debt.
Conversely, IGT is splitting its business into two parts. It will receive $4.05 billion in cash for its gaming division. IGT will use some of that money to pay off debts and distribute some to its shareholders. Apollo estimates the enterprise value of the combined business to be $6.2 billion.
IGT’s lottery business will continue operating under a new name. It will also change its ticker symbol, which is currently $IGT (International Game Technology PLC 14,99 -0,13%). However, it hasn’t yet announced what the new brand or symbol will be.
Soft Landing for Everi Investors
The last few years have been a wild ride for Everi shareholders. Of all the companies in the gaming space, it experienced one of the largest pandemic-related swings. Share prices cratered to $1.65 when retail casinos shut down after COVID-19 reached American shores. By October 2021, they had reached an all-time high of $25.94.
They’ve been sliding since then, and the original merger plan with IGT didn’t help matters. Some investors felt that Everi was undervalued and that they wouldn’t be getting a fair share of the resulting company. The stock had seemed to stabilize north of $11 before the news but soon began to fall again, bottoming out at $6.37.
Earlier this week, it had recovered to around $9. News of the cash buyout has caused a jump to $12.94 as of this article’s time of publication. At $14.25 per share, shareholders will receive a 56% premium on yesterday’s closing price.
Daniel Cohen, an Apollo partner speaking on behalf of the company, said:
We are excited to reach this agreement with IGT and Everi, which establishes a leading, diversified solutions provider that is well positioned across the entire gaming ecosystem. As an active investor in the gaming and leisure sector for many years, we have long admired both companies and their highly talented teams. We strongly believe in the value proposition of the combination and are confident these complementary gaming platforms will be even better positioned under private ownership to capture the opportunities ahead to grow and create value.
Two Big Names in Old-School Slots
Most US casino gamblers are familiar with both companies’ slots. Each is a staple on retail casino floors and online casino sites alike.
IGT (short for International Game Technology) is one of the oldest names in the business. It has been around since 1975, first making a name for itself as one of the earliest manufacturers of video poker machines. Over the years, it has produced some of the most iconic retail slots, like Cleopatra and Double Diamond.
In 2005, IGT made the jump to online slots by acquiring WagerWorks. That ensured that faithful adaptations of its hits were available to US online casinos when they arrived nearly a decade later.
One of IGT’s most important assets is a deal with Sony Pictures Television granting it the exclusive rights to make real-money slots based on Wheel of Fortune, the popular game show. These slots have been such a hit with US audiences that BetMGM even launched a subsidiary online casino brand dedicated to them.
Everi is a younger company, founded in 2004. Ironically, it’s the more old-school of the two in its design philosophy. It made a name for itself producing mechanical reel stepper slots that play to “Old Vegas” nostalgia.
These have done surprisingly well at US online casinos, perhaps due to their reliance on tried-and-tested mechanics. Other slots developers have found that compared to their European peers, US online casino peers favor simplicity and similarity to the retail casino experience.
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