Scientific Games to sell Lottery business to Brookfield Business Partners

New York-listed Scientific Games has agreed a $6.05bn deal to sell its lottery division to private equity firm Brookfield Business Partners.

Brookfield will pay a cash consideration of $5.825bn for the business, with an additional $225m payable as an earn-out, subject to achieving certain EBITDA targets in 2022 and 2023.

The acquisition, which is expected to close in the second quarter of 2022, gives Brookfield control of a global lottery business serving approximately 130 government and non-government lottery entities and the leading provider of instant games.

“This transaction is transformative in accelerating the delivery of our stated strategy to optimize our portfolio, aggressively de-lever our balance sheet and position us to invest in future growth. We conducted a thorough review of paths to divest the Lottery business and we are confident that this transaction maximizes value and certainty while minimizing complexity and execution risk, and positions both Scientific Games and SG Lottery for continued success along their unique growth trajectories,” said Barry Cottle, president and CEO of Scientific Games.

“The significant near-term proceeds from this transaction as well as our previously announced sale of Sports Betting will transform our balance sheet and provide the financial flexibility to invest organically and inorganically to accelerate our strategies. This marks a major milestone and puts us on a clear path to achieve our vision to become the leading cross-platform global game company and unlock our full value for shareholders.”

Patrick McHugh, chief executive of Scientific Games Lottery, added: “We are thrilled with this outcome and what it means for the future of Scientific Games Lottery and our customers. I am confident that, with Brookfield’s support, we will have the flexibility and agility to expand our deep product portfolio to meet our customers’ evolving needs and maximize lottery beneficiary proceeds across the globe, enabling us to capture the significant opportunities we see ahead.”

Following the acquisition, SG Lottery will continue to operate from its headquarters in Atlanta, Georgia, with Scientific Games Corp. providing certain finance, information technology, regulatory compliance, legal, human resources and facilities to the business at cost for an initial term of 12 months.

"The Scientific Games Lottery team has built a leading business, which has innovated its industry, at the convergence of games, technology and services, across retail and digital channels for its global customers," said David Nowak, managing partner at Brookfield Business Partners. "With our capabilities and global reach, we look forward to supporting management in the continued growth of the business.”

Shares in Scientific Games Corp. (NSQ:SGMS) closed 0.76 per cent higher at $89.09 per share in New York Wednesday, prior the announcement, while shares in Brookfield Business Partners LP (NYSE:BBU) closed 0.21 per cent lower at $48.35 per share.