IGT offloads Lottomatica business to Apollo for €950m
Technology supplier targets financial flexibility and reduced debt with deal scheduled to close in H1 2021
IGT has agreed the €950m (£867m) sale of its Italy-focused Lottomatica B2C business to a group of investors fronted by Apollo Global Management.
The deal, which includes the Lottomatica Videolot Rete S.p.A. and Lottomatica Scommesse S.r.l. businesses, will see the sale of Lottomatica to Gamenet Group, an investment fund managed by Apollo.
The sale includes Lottomatica’s retail and online business across gaming and sports betting, including land-based machines.
Under the terms of the agreement, €725m will be paid at close, with a further €100m payable by the end of 2021. A final payment of €125m will be made on 30 September 2022.
The transaction values the Lottomatica business at €1.1bn.
IGT’s board of directors have unanimously approved the billion-euro deal, which remains subject to regulatory approval.
IGT has said it will use funds from the sale, which is expected to close in H1 2021, to reduce the firm’s debts.
“The transaction enables IGT to monetise 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,” IGT CEO Marco Sala said.
“Aligning with our recent reorganisation, the favourable rebalancing of our business and geographic mix reframes and simplifies our priorities while improving the company’s future profit margin, cashflow generation and debt profile,” Sala added.
The acquisition adds yet another gambling business to the emerging Apollo portfolio, following its €500m investment in Czech-based lottery operator Sazka Group and a potential £1.9bn buyout of Great Canadian Gaming Corporation in November.
Regulus Partners analyst Paul Leyland described the sale of Lottomatica as a “win-win” from a strategic standpoint for IGT.
“IGT gets to dispose of a business which does not obviously fit with its lottery/B2B core or its US aspirations at an historical multiple of FCF that looks sensible verging on attractive given heavy retail exposure to an already economically fragile country rocked by Covid-19 and facing ongoing fiscal-regulatory tightening,” Leyland explained.
In October, Lottomatica generated gross gambling revenue of €20.2m across retail and online in Italy.