n December, Apollo and Texas Pacific agreed to pay us$ 17.1 billion for casino giant Harrah’s Entertainment, a deal that is expected to close by the end of the year.
A spokeswoman for Texas Pacific declined comment on the speculation. IGT spokesman Ed Rogich said the company’s policy is not to comment on rumors surrounding its stock price.
On Friday, shares of IGT jumped as much as 9 percent in value on the New York Stock Exchange before closing the session at uss$ 40.62, up us$ 2.74, or 7.23 percent. More than 17 million shares of IGT were traded, almost six times the average daily volume.
IGT has more than 332.4 million shares outstanding and a market capitalization of us$ 13.5 billion.
Eric Green, a senior portfolio manager at Penn Capital Management in Cherry Hill, whose firm controls about 200,000 shares of IGT stock, said he heard the two private equity groups were looking at IGT. He also thought it was possible that IGT management could be looking for a way to take the company private.
Goldman Sachs gaming analyst Steven Kent told investors private equity would be attracted to a company like IGT because of its sizable cash flow of about us$ 500 million annually. "While it is difficult to comment, we believe there would be considerable benefits to an acquisition of International Game Technology," Kent said in a note to investors.
Wall Street analysts believe IGT is the slot maker in the best position to capitalize on an expected replacement cycle where server-based gaming machines begin supplanting older games, potentially in 2009.