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Scientific Games sells lottery business to Canadian asset manager Brookfield for $6B

Scientific Games divesting lottery business.
Reading time 2:28 min
The two companies announced the agreement on Wednesday at a value of $6.05B consisting of $5.825B in cash and an earn-out of up to $225M based on the achievement of certain EBITDA targets in the next two years. SG Lottery will remain headquartered in its current metro-Atlanta location. The move comes after Endeavor agreed in September to pay $1.2B for SG's sports betting business OpenBet.

Scientific Games Corporation announced Wednesday the signing of a definitive agreement to sell its Lottery business to Brookfield Business Partners for total consideration of $6.05 billion, consisting of $5.825 billion in cash and an earn-out of up to $225 million based on the achievement of certain EBITDA targets in 2022 and 2023. The transaction is expected to close in Q2, 2022, subject to applicable regulatory approvals and customary closing conditions. 

SG Lottery will remain headquartered in metro-Atlanta with operations expected to continue around the world. For an initial term of 12 months, Scientific Games will provide the SG Lottery with certain finance, information technology, regulatory compliance, legal, human resources and facilities at cost after the signing of a Transitional Services Agreement between the two parties. 

In an official press release, Barry Cottle, President and CEO of Scientific Games, spoke about the transaction and described it as “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. 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”, he said. 

Patrick McHugh, Chief Executive of Scientific Games Lottery, added: “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.”

David Nowak, Managing Partner of Brookfield Business Partners, commented: "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. With our capabilities and global reach, we look forward to supporting management in the continued growth of the business.” 

Scientific Games said in June that it would explore divesting its lotteries and sports-betting units as part of a plan to reign in debt. Endeavor Group Holdings Inc. agreed in September to pay $1.2 billion for its betting business. 

Brookfield, which is based in Toronto, is one of the largest alternative asset managers in the world with more than $625 billion in assets under management and operations in 30 countries around the world, according to its website.

Scientific Games’ Lottery business is a diversified, global lottery partner with long-standing relationships with approximately 130 government and non-government lottery entities in over 50 countries. 

It provides a suite of turn-key solutions covering the entire lottery ecosystem, including instant and terminal-generated lottery games, sports betting, lottery systems and retail technology, and the iLottery market. 

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