Global gaming giant Scientific Games has proposed a merger with its 81%-owned subsidiary SciPlay Corporation that would see the digital technology arm become a wholly-owned subsidiary of its parent.
Under the proposal to acquire the outstanding 19% equity interest in SciPlay that it does not currently own, SciPlay’s other shareholders would become direct shareholders in Scientific Games by receiving 0.250 shares of Scientific Games common stock for each share of SciPlay Class A common stock they own. The company said this implies an enterprise value of US$1.9 billion and a premium of 11% based on the respective closing stock prices of Scientific Games and SciPlay as of the close of business on 14 July 2021.
The proposal comes two weeks after Scientific Games unveiled plans to divest its lottery and sports betting businesses in order to provide resources to invest more in digital.
In a letter sent to SciPlay’s Board of Directors, Scientific Games said it believes such a merger would “deliver significant operational, strategic and financial benefits and drive shareholder value in excess of what each company could generate on a standalone basis.
“Further, we believe SciPlay public shareholders will benefit from increased trading liquidity as a result of being part of a pro forma entity with a market capitalization of US$7.0 billion and a public float that would be approximately 18x larger than SciPlay today.”
In a separate announcement, the company added that it saw the proposed transaction as “another important step forward on the strategy Scientific Games recently announced to become a content-led growth company with a particular focus on digital markets and unlock the value of the company’s products and technologies. SciPlay fits perfectly into Scientific Games’ focus on building engaging content and launching great games more fully cross-platform.”
It stressed, however, that the proposal constitutes an expression of interest only and subject to modification or withdrawal at any time.
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