Major Corporate Merger in the Gaming Supplier Industry Set to Conclude
A monumental merger is on the horizon in the supplier sector, with the potential to redefine the landscape of gaming technology. The Nevada Gaming Control Board recently convened for a pivotal review, marking a significant step towards final approval of this transformative deal.
Key Players Present Their Case
During the Nevada Gaming Control Board’s latest meeting, top executives from Apollo Global Management, International Game Technology (IGT), and Everi Holdings detailed Apollo’s ambitious $6.3 billion acquisition plan. This involved a thorough discussion on a range of topics, including ownership transitions and corporate governance protocols.
IGT President Nick Khin was present, seeking suitability approval as the interim CEO of the newly formed organization. Upon the merger’s completion, former Aristocrat Gaming CEO Hector Fernandez will take the helm.
A Critical Review Process
Now that the initial discussions have concluded, the board has unanimously approved all proposals regarding the merger. This development is vital as the merged entity will establish its headquarters in Nevada, amplifying the state’s influence in the gaming industry. Although the merger was initially presented last July, specific details have only surfaced recently.
With a final ruling from the Nevada Gaming Commission scheduled for June 26, the clock is ticking for all regulatory requirements to be met.
Expanding Horizons in Gaming Technology
The merger is not just about size; it’s a strategic integration of IGT’s gaming prowess with Everi’s financial technology capabilities. While the newly formed entity will maintain the IGT name, the sizeable lottery segment will be spun off into an independent company.
Apollo has significantly invested in the gaming field over the last two decades, adding PlayAGS to its portfolio and acquiring the Venetian-Palazzo casino for $6.25 billion—a price tag almost identical to the current acquisition.
Apollo partner Daniel Cohen emphasized the aim of creating long-term value and positioning IGT as the go-to supplier for major casino operators, enabling them to satisfy all their product requirements in one place.
Bridging the Competitive Gap
IGT has encountered stiff competition from key players like Aristocrat and Light & Wonder, with the latter gaining momentum since diversifying its operations. Cohen remarked on IGT’s need to enhance its profit margins to compete effectively.
Acknowledging IGT’s current standing, Cohen expressed the goal of narrowing the performance gap with its larger counterparts.
Financial analysis firm Fitch Ratings has already provided a positive outlook on the merged entity, indicating that their combined operations—featuring nearly 70,000 slot machines—will surpass those of Aristocrat and Light & Wonder.
A Unique Acquisition Framework
This merger stands out due to the simultaneous acquisition of two companies by a third party, especially since IGT and Everi had their agreement earlier in the year. This move was humorously likened to a “hold my jacket” scenario by outgoing chairman Kirk Hendrick, as Apollo stepped in last minute to reshape the deal.
Significant changes were made between the initial agreement and the final arrangement, including shifts in leadership roles. Current IGT CEO Vince Sadusky will transition to lead the spun-off lottery business.
Cohen recounted that Apollo had shown interest in IGT since 2014, ultimately viewing this merger as an opportunity to effectively realize shareholder value without exposing them to integration risks.
Compliance and Regulatory Challenges Ahead
During board discussions, George Assad, a board member, highlighted concerns surrounding compliance and anti-money laundering (AML) policies, despite acknowledging that most violations came from casino operators—not suppliers.
Everi’s Chief Legal Officer, Kate Lowenhar-Fisher, assured the board that compliance efforts would remain robust as the two teams merge in the future. With eight regulatory approvals still necessary, including a crucial one from Pennsylvania, the pressure is on to finalize the merger by July 1.
Transitioning Leadership
As chairman Kirk Hendrick steps down, the board welcomes former Gaming Arts CEO Mike Dreitzer to guide future activities. Observers have noted that Hendrick’s term was cut short amid a tumultuous regulatory landscape marked by significant AML fines imposed on major casinos.
Industry stakeholders hope Dreitzer’s extensive experience will infuse fresh insights into this essential regulatory body, steering it through one of the most challenging periods in the state’s gaming history.