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Scientific Games confirms 34.9% stake sale to institutional investors

14th September 2020 11:48 am GMT
Scientific Games

New York-listed Scientific Games has confirmed that a number of long-term institutional investors have reached an agreement to acquire a 34.9 per cent stake in Scientific Games from MacAndrews & Forbes Incorporated.

As previously reported by Gaming Intelligence, the institutional investors include gaming industry investor Caledonia, with the 34.9 per cent stake to be acquired at a price of $28.00 per share.

In connection with the transaction, Scientific Games is implementing a series of governance changes, with former Aristocrat CEO Jamie Odell, along with former Aristocrat chief financial officer Toni Korsanos, joining the Scientific Games board as executive chair and executive vice chair respectively.

“Scientific Games is well-positioned for future success given our industry leading portfolio of products and technologies, loyal customer base and talented leadership team,” said Scientific Games president and CEO Barry Cottle. “We are pleased to have the support of our refreshed board and new investor base as we continue to execute on our strategy to drive meaningful long-term growth and shareholder value creation.”

The new board will oversee and help implement transformative strategies to optimize the company’s business portfolio and shareholder value, including accelerating debt reduction efforts and increasing its focus on digital gaming and sports betting growth opportunities.

The board will be reconstituted to include all existing directors, other than the MacAndrews & Forbes representatives, as well as three new directors. The board will comprise a majority of independent directors with a deep and diverse mix of gaming industry, financial, strategic and operational experience.

Odell and Korsanos will be joined on the board by an additional independent non-executive director.

Ronald Perelman, the current executive chairman of Scientific Games who also serves as MacAndrews & Forbes chairman and CEO, as well as Barry Schwartz and Frances Townsend, the two other MacAndrews & Forbes representatives, will resign from the board.

Odell and Korsanos currently serve as senior advisors to the Scientific Games board and have been working with Cottle to develop and support the company's current growth strategies.

“I am excited to become the executive chair of Scientific Games and work alongside the company's world-class leadership team at such an important time for both the Company and the broader gaming industry,” said Odell. “The company possesses a market leading portfolio of products and a differentiated position in the emerging digital gaming and sports betting industries.

“Scientific Games will have the support of a highly credentialed and experienced investor base, including Caledonia, as we implement transformative initiatives to optimize the asset portfolio and unlock the full potential of the company's best-in-class collection of products and technologies. We will be highly focused on rapidly de-leveraging the balance sheet and creating a flexible, agile company that is poised to capitalize on evolving industry and macroeconomic trends to deliver outsized returns to investors.”

Cottle added: “Jamie is a true leader and visionary in gaming and has been a trusted advisor to the company and the Scientific Games board. I am thrilled to partner with Jamie and Toni to shape a bright future for Scientific Games. Their support is a testament to the faith they have in our business and team. I want to thank Ronald and MacAndrews & Forbes for their support since 2003 and Barry and Fran for their contributions as directors.”

The transaction between the investing parties and MacAndrews & Forbes is expected to be executed in multiple tranches after which no investor is expected to beneficially own more than 9.9 per cent of the outstanding shares of Scientific Games.

The first tranche sale is expected to be completed today and the transaction is expected to be fully completed over the next several weeks. The changes to the Scientific Games board become effective upon the first tranche sale.

“As gaming industry revenues continue to recover, we believe Scientific Games is poised to benefit from a renewed wave of growth given our position at the forefront of the rapidly expanding digital gaming and sports betting ecosystem and our vast portfolio of original content and licensed brands,” continued Cottle.

“We are committed to maintaining our position as the preferred partner to the leading casino and sports betting operators across the United States and around the world by delivering unparalleled customer service and continuing to innovate our leading technology and product portfolio.”

Shares in Scientific Games Corporation (NSQ:SGMS) closed down 1.35 per cent at $18.97 per share in New York Friday.

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