Scientific Games completes sale of lottery business for $5.8bn

5th April 2022 8:01 am GMT

New York-listed Scientific Games, doing business as Light & Wonder, has completed the sale of its lottery business to Brookfield Business Partners for $5.8bn.

The sale marks a major milestone in transforming the company and its balance sheet following a strategic review last year, and allows Scientific Games to focus its attention on providing games, services and technology to the global lottery and lottery-administered sports betting markets under its new name, Light & Wonder.

The lottery business will retain the Scientific Games name which it was established under in 1973, with Metro Atlanta remaining as its global headquarters.

“This marks an exciting new chapter for Scientific Games, and positions the company to build on the record growth we achieved in 2021 across all parts of our lottery business,” said Pat McHugh, who will continue as CEO of Scientific Games after serving as Lottery Group chief executive under the previous company structure.

“Taking a long-term view of the business, Brookfield is committed to providing Scientific Games with the flexibility and agility necessary to expand our deep product portfolio to meet the evolving needs of our customers and their beneficiaries.”

“The Lottery Business sale closing is a significant step towards streamlining our portfolio and strengthening our balance sheet as we execute on our strategy to transform our business with a singular focus on building great games and franchises to entertain our players wherever and whenever they want to play,” said Light & Wonder CEO Barry Cottle. “The convergence of land-based and digital continues to gain momentum and we are strongly positioned to be a leader in the industry.

“With the completion of the Lottery Business sale and the upcoming sale of our Sports Betting Business, we are moving rapidly as we execute on our vision to be a leading cross-platform global game provider and unlock the full potential of Light & Wonder. This also positions the Lottery Business for success as a stand-alone company completely focused on innovating for its global lottery customers.”

Light & Wonder plans to use the net proceeds from the sale to pay down $5.0bn of its existing debt. Taking this into account, the company’s adjusted net debt reflecting after-tax proceeds at the end of 2021 would have been $3.2bn. The sale of the OpenBet sports betting business to Endeavor Group's IMG Arena in expected to close during the second quarter.

Light & Wonder will now execute a three-year, $750m share repurchase program, and will prioritize using its capital for buy-backs, debt reduction and organic investments, unless convinced that M&A activity will deliver greater long-term shareholder value than other uses of the company’s capital.

“The proceeds from this transaction and our strong cash profile allow us to accelerate progress on our capital allocation strategy,” said Light & Wonder chief financial officer Connie James. “We now have the financial flexibility and balance sheet integrity that, combined with our double-digit growth profile and high mix of digital and recurring revenues, give us a tremendous opportunity to continue to drive shareholder value.”

Shares in Scientific Games Corporation (NASDAQ:SGMS) closed 4.06 per cent higher at $63.24 per share in New York Monday.

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