Apollo swoops in to acquire Everi and IGT gaming in $6.3bn deal

Overview of the $6.3 Billion Acquisition Deal

Apollo Global Management’s acquisition of IGT’s gaming business and Everi Holdings is valued at approximately $6.3 billion, marking one of the most significant consolidations in the gaming industry in recent years. The deal involves spinning off IGT’s gaming operations and merging them with Everi, a specialist in casino technology and payment solutions, under a newly formed combined enterprise.

Everi shareholders are set to receive $14.25 per share in cash, representing a substantial 56% premium over the company’s closing price as of July 25, 2023. Simultaneously, IGT will receive $4.05 billion in cash, highlighting the sizeable financial commitment Apollo is making to integrate these two businesses. This acquisition effectively terminates the prior merger agreement between IGT and Everi.

The transaction has secured unanimous approval from a special committee of IGT’s board and the full endorsement of Everi’s board of directors, underscoring the strategic alignment and confidence in the benefits of this new partnership.

Background: The Original IGT-Everi Merger Plans

Before Apollo’s intervention, IGT and Everi were already in the process of merging. In February 2023, IGT announced plans to combine its Global Gaming and PlayDigital divisions with Everi to form a comprehensive global gaming enterprise. The strategy aimed to harness the strengths of both companies to offer a more diverse product portfolio and reach.

The original merger intended to maintain a publicly traded presence under the IGT name on the New York Stock Exchange, positioning the combined company as a major player in the casino technology and gaming solutions market. However, the new Apollo deal supersedes that plan, leading to the delisting of the combined entity from the public market.

Notably, IGT’s legacy lottery business is excluded from this transaction and will continue to operate as a separate, publicly listed company under a new brand identity, preserving its market presence independently of the gaming operations.

Strategic Rationale Behind Apollo’s Acquisition

Apollo’s acquisition is driven by the ambition to create a leading, diversified gaming solutions provider that spans the entire gaming ecosystem. By merging IGT’s gaming capabilities with Everi’s expertise in casino technology and payments, Apollo aims to build a company with enhanced scale, innovation potential, and market reach.

Daniel Cohen, Apollo partner, highlighted that private ownership will better position the combined company to capture growth opportunities and generate long-term value. Apollo’s extensive experience as an active investor in the gaming and leisure sectors provides a strong foundation to support the integration and expansion of the business.

The deal reflects Apollo’s strategic focus on sectors with robust growth prospects and recurring revenue streams. Integrating technology, hardware, and payment solutions under one roof allows the new entity to offer comprehensive, end-to-end solutions to casino operators worldwide.

Leadership and Management Changes Post-Acquisition

The acquisition has brought changes to the leadership structure initially envisioned under the original IGT-Everi merger. Vince Sadusky, IGT’s current CEO, will oversee the separation of the gaming business and facilitate the transition but will continue as CEO of the standalone lottery business, which remains public.

Everi’s executive chairman, Mike Rumbolz, who was expected to chair the new combined company, is notably absent from the Apollo announcement, indicating potential reorganization in governance roles. The exact leadership for the merged IGT-Everi business remains under wraps, though key executives will retain prominent positions.

Fabio Celadon, IGT’s executive vice president of strategy and corporate development, will assume the role of chief financial officer (CFO), while Everi’s CFO, Mark Labay, is appointed chief integration officer. The new entity will be headquartered in Las Vegas, a strategic location central to the gaming industry.

Implications for Shareholders and Market Valuation

Everi shareholders benefit directly from the deal through a cash payment that represents a 56% premium over the company’s recent trading price, offering immediate and significant value. This premium reflects Apollo’s confidence in Everi’s intrinsic value and growth potential when combined with IGT’s gaming assets.

IGT shareholders will receive $4.05 billion in cash for the gaming business, while retaining a minority stake in the combined entity through De Agostini SpA, IGT’s previous majority shareholder. This structure enables existing investors to participate in future growth while realizing liquidity.

The transaction’s valuation at $6.3 billion underscores the scale and importance of the combined business, which will have enhanced capabilities to compete globally. The deal’s completion is expected to create shareholder value by streamlining operations and accelerating innovation.

Market and Industry Impact of the Combined IGT-Everi Entity

The merger under Apollo’s ownership is poised to reshape the gaming technology landscape by creating a diversified solutions provider with a broad product portfolio, including slot machines, casino management systems, and payment technologies. This integrated approach will strengthen the company’s competitive position.

With private ownership, the combined company can pursue longer-term strategic initiatives without the immediate pressures of public market quarterly reporting. This flexibility is expected to facilitate investments in research and development, product innovation, and global expansion.

Industry analysts anticipate that the new entity will better serve casino operators by offering end-to-end solutions across gaming floors, digital platforms, and payment processing, thereby driving efficiencies and enhancing customer experiences.

Future Outlook and Growth Opportunities

The combined IGT-Everi business is positioned to capitalize on significant growth opportunities within the evolving gaming and leisure sectors. Trends such as digital transformation, cashless payment adoption, and enhanced player engagement technologies present avenues for expansion.

Apollo’s expertise and capital resources will support accelerated integration efforts and strategic investments aimed at expanding the company’s global footprint. This includes potential new product launches and market entries in emerging jurisdictions.

Both companies’ leadership have expressed optimism about the future, highlighting the potential to unlock value through synergies, operational efficiencies, and innovation. The private ownership structure is expected to provide the stability and focus required to execute these plans effectively.

Conclusion

Apollo Global Management’s acquisition of IGT’s gaming business and Everi Holdings marks a transformative moment in the gaming industry. By combining two leaders in casino technology and gaming solutions, Apollo is creating a diversified powerhouse equipped to navigate the evolving landscape. The $6.3 billion deal offers substantial value to shareholders, introduces new leadership dynamics, and sets the stage for accelerated innovation and growth under private ownership. As the combined entity integrates operations and expands globally, it is well-positioned to deliver enhanced value to customers and stakeholders alike, signaling a promising future for the gaming ecosystem.