nternational Game Technology today announced that its wholly-owned subsidiary Lottomatica Holding S.r.l. has signed a definitive agreement to sell one hundred percent (100%) of the share capital of Lottomatica Videolot Rete S.p.A. and Lottomatica Scommesse S.r.l., the members of the IGT group which conduct its Italian B2C gaming machine, sports betting, and digital gaming businesses, to Gamenet Group S.p.A., a subsidiary of funds managed by an affiliate of Apollo Global Management, Inc
"The transaction enables IGT to monetize its leadership positions in the Italian B2C gaming machine, sports betting, and digital spaces at an attractive multiple to comparable Italian transactions, providing us with enhanced financial flexibility," said Marco Sala, CEO of IGT. "Aligning with our recent reorganization, the favorable rebalancing of our business and geographic mix reframes and simplifies our priorities while improving the Company's future profit margin, cash flow generation, and debt profile."
The transaction values the businesses being sold at an enterprise value of approximately €1.1 billion. The businesses being sold generated about €207 million in aggregated adjusted EBITDA1 in 2019, placing the transaction in the upper band of valuation ranges achieved by the most recent Italian benchmarks. The sale price is €950 million, with €725 million (US$879.5 million) payable at closing, €100 million (US$121.3 million) payable on December 31, 2021, and the remaining €125 million (US$151.6 million) payable on September 30, 2022. The deferred payments are not subject to any conditions other than closing and are secured by an equity commitment letter from the Apollo-managed funds. IGT will use net proceeds from the transaction primarily to reduce debt.
The Board of Directors of IGT has unanimously approved the transaction, which remains subject to customary closing conditions, including regulatory approvals. IGT expects that the transaction will close in the first half of 2021.
Credit Suisse International is acting as lead financial advisor to IGT, UBS is acting as financial advisor and fairness opinion advisor to IGT and its Board of Directors, and White & Case and NCTM are advising IGT. Mediobanca, Paul, Weiss, Rifkind, Wharton & Garrison LLP and the Italian offices of Cleary, Gottlieb, Steen & Hamilton LLP and Latham & Watkins, LLP are advising the buyer.