Aristocrat Leisure to buy VGT
The deal comes as the gaming industry pursues consolidation to combat slow growth. Another equipment maker, Las Vegas-based International Game Technology, is exploring a sale, and Aristocrat said revenue from VGT's operations may give it sufficient firepower to consider expansion in other parts of the world.
VGT, based in Franklin, Tennessee, makes slot machines primarily for Native American casinos. VGT reported revenue of US$ 236 million for the year-ended December 2013.
Aristocrat said it will fund the acquisition and also refinance existing debt through two new debt facilities worth US$ 1.3 billion and US$ 93.44 million respectively, as well as an underwritten institutional share placement of US$ 351 million. Aristocrat shares were placed on a trading halt on Monday pending the share placement's bookbuilding.
At US$ 1.28 billion, VGT's price tag is close to half Aristocrat's market value of US$ 79 billion at Friday's close. The Australian firm posted a net profit of US$ 100 million for the full year ended September, up nearly 17 percent from a year ago.
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