he transaction, which follows a review of strategic alternatives with respect to Scientific Games Racing, marks a significant step in the company's strategy to focus its business portfolio and drive sustainable, profitable growth.
Importantly, the transaction will enable Scientific Games to participate in future growth of the combined businesses of Sportech and Scientific Games Racing through an equity interest in Sportech that Scientific Games will receive as part of the transaction consideration. Upon the closing of the transaction, the companies intend to enter into a number of ancillary agreements to deliver additional strategic value as part of an ongoing relationship.
Commenting on the announcement, Scientific Games' President and CEO, Michael Chambrello, stated, "The transaction announced today is an important strategic step in the evolution of Scientific Games as we strengthen our focus on our core global lottery and gaming businesses. At the same time, the transaction with Sportech will enable us to participate in future opportunities for the combined business, which we expect to emerge as a global, leading provider in the pari-mutuel wagering industry. We believe there are significant opportunities for value creation by combining these businesses, and we are looking forward to realizing that potential value creation as a shareholder in Sportech. We are thankful to the employees of our racing division for their unwavering commitment to the success of this business and look forward to partnering on mutually beneficial opportunities going forward."
Under the terms of the agreement, which has been approved by the Boards of Directors of both companies, Scientific Games will receive approximately us$ 33 million in cash at closing, us$ 10 million in deferred cash consideration payable in September 2013 and us$ 32 million in Sportech stock, representing approximately 20% of the outstanding shares.
Should Scientific Games Racing, under Sportech's ownership, achieve certain performance targets by the third anniversary of the consummation of the transaction, Scientific Games will be entitled to an additional cash payment of up to us$ 8 million. Scientific Games' Board of Directors received a fairness opinion in connection with the transaction.
For the year ended December 31, Scientific Games Racing generated revenues of approximately us$ 110 million. Scientific Games indicated that the transaction, which is expected to enhance the company's growth profile and margin structure, will result in a non-cash, pre-tax charge of approximately us$ 55 to us$ 65 million in the fourth quarter of 2009.
The transaction is conditioned upon, among other things, Sportech shareholder approval, closing of Sportech's financing arrangements, certain regulatory and bank approvals and other customary closing conditions. Subject to the satisfaction of these conditions, the transaction is expected to close in the first half of 2010. In connection with the agreement, certain shareholders and directors of Sportech have entered into voting agreements under which they have agreed to vote their shares in favor of the transaction.
Upon the closing of the transaction, the Board of Sportech will appoint Brooks Pierce, President of Scientific Games Racing, to the Board as an Executive Director. In addition, the Board of Sportech will appoint Lorne Weil, Chairman of Scientific Games, to the Board as a Non-Executive Director (in his individual capacity and not as a representative of Scientific Games).
Ian Penrose, CEO of Sportech Plc, stated, "This transaction will provide Sportech with a multi-sport, multi-channel gaming business. The combined entity, which will have global reach and will be one of the leading pari-mutuel product and systems providers, will optimize its existing and new technologies to capitalize on worldwide growth opportunities."