Scientific Games proposes to take over full ownership of SciPlay

15th July 2021 12:44 pm GMT
Scientific Games

New York-listed Scientific Games has proposed to acquire the remaining 19 per cent equity interest in social gaming operator SciPlay that it does not currently own.

The proposal will see SciPlay shareholders, other than Scientific Games and its subsidiaries, receive 0.250 shares of Scientific Games common stock for each share of SciPlay Class A common stock they own.

This would imply an enterprise value of $1.9bn and purchase multiple of 2021’s estimated EBITDA of 10.1x and 2022’s estimated EBITDA of 9.4x.

The proposal is part of Scientific Games’ recently announced strategy to become a content-led growth company with a particular focus on digital markets.

“We believe a merger of SGMS and SciPlay will deliver significant operational, strategic and financial benefits and drive shareholder value in excess of what each company could generate on a standalone basis,” said Scientific Games in a letter to the SciPlay board.

“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 $7.0bn (based on the closing share prices of SGMS and SciPlay on July 14) and a public float that would be approximately 18x larger than SciPlay today.

“Through our existing collaboration with SciPlay, we believe a transaction would be seamless and we look forward to fully joining forces with SciPlay's talented leadership team and employees to continue innovating on behalf of customers and players.”

The transaction implies a premium of 11 per cent based on the Scientific Games and SciPlay respective closing stock prices as of the close of business on Wednesday, the last trading day prior to the proposal, and a premium of 10 per cent based on the thirty-day volume weighted average price for SciPlay’s shares.

Scientific Games currently owns approximately 81 per cent of the economic interest and 98 per cent of the voting interest in SciPlay, which was spun off from Scientific Games in May 2019.

Shares in Scientific Games Corporation (NSQ:SGMS) closed 2.24 per cent lower at $68.07 per share in New York Wednesday, while shares in Sciplay Corporation (NSQ:SCPL) closed Wednesday 3.76 per cent lower at $15.36.

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