425: IGT Addresses Market Reaction and Regulatory Process for Everi Transaction

IGT provides an update to employees regarding the market's reaction to the proposed transaction with Everi, the regulatory approval process, and communication channels for updates.

Summary

• IGT's CEO, Vince Sadusky, addressed employees regarding the proposed transaction with Everi.
• The market reaction to the announcement and the recent earnings report was not significantly positive, with the stock price trending down.
• The transaction is expected to close in late 2024 or early 2025.
• The timeline is dependent on shareholder approvals from both IGT and Everi, as well as regulatory approvals, including antitrust approval in the U.S. and approvals from gaming regulators for over 400 licenses worldwide.
• The company has established communication channels, including a microsite on OneIGT and the weekly OneIGT newsletter, to keep employees informed.
• The microsite includes a replay of the internal video conference, public-facing slides, and answers to frequently asked questions.
• Employees can submit questions anonymously through YourIGT.
• IGT and Everi will file relevant materials with the SEC, including a registration statement on Form S-4 that will include a joint proxy statement/prospectus.
• The communication emphasizes that it is for informational purposes only and does not constitute an offer to buy or sell securities.
• The document contains forward-looking statements regarding the potential benefits and synergies of the proposed transaction, which are subject to risks and uncertainties.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the CEO expresses confidence in the long-term benefits of the transaction, the market's initial reaction was negative, and the closing is subject to regulatory approvals and other risks.

Positives

• IGT believes in the long-term benefits of separating its businesses and has received positive feedback from investors who agree that the transaction will benefit both companies.
• The company is committed to maintaining consistent two-way communication with employees throughout the transaction process.
• Dedicated communication channels have been established to keep employees informed about the transaction.

Negatives

• The market reaction to the announcement and the recent earnings report was not significantly positive, with the stock price trending down.
• The transaction is not expected to close until late 2024 or early 2025, which may be viewed negatively by investors focused on short-term results.
• The transaction is subject to various regulatory approvals, which could delay or prevent the closing.

Risks

• The transaction may not receive the necessary regulatory, stockholder, and shareholder approvals.
• Everi and IGT may be unable to achieve the expected benefits, synergies, and operating efficiencies from the transaction.
• The announcement or consummation of the transaction could negatively affect the market price of Everi and IGT's stock.
• Significant transaction costs, fees, expenses, and charges could arise.
• The transaction could face risks related to competition in the gaming and lottery industry, dependence on licensing arrangements, and economic changes in global markets.

Future Outlook

IGT anticipates the transaction with Everi will create two pure-play companies focused on their respective industries and believes the market will react positively as the transaction progresses towards closing.

Management Comments

• Vince Sadusky, CEO: 'Just like your skill and dedication drive our success everywhere we conduct business, your voice and your input will help drive our ability to deliver meaningful content about our transaction in the weeks and months to come.'
• Vince Sadusky, CEO: 'This is an important period for us, and ensuring we maintain consistent two-way communication is a priority for me and leaders throughout the Company.'
• Max Chiara, CFO, highlighted the commitment to balancing 2023 full-year results with more moderate expectations for the first quarter of 2024.

Industry Context

The gaming industry is seeing increased consolidation as companies seek to gain scale and focus on specific segments. This transaction aligns with that trend, creating a pure-play lottery business and a pure-play gaming business.

Comparison to Industry Standards

• Comparable transactions in the gaming industry include the acquisition of Scientific Games' lottery business by Brookfield Business Partners, which also aimed to create a pure-play lottery company.
• The regulatory approval process for this transaction is expected to be similar to other large gaming mergers, requiring scrutiny from antitrust authorities and gaming regulators in multiple jurisdictions.
• The timeline for closing the transaction, late 2024 or early 2025, is typical for deals of this size and complexity.

Stakeholder Impact

• Shareholders of IGT and Everi will be impacted by the transaction, as they will need to vote on the proposed deal.
• Employees of IGT and Everi may be affected by the integration of the businesses, although the company states that it is committed to maintaining consistent communication.
• Customers of IGT and Everi could benefit from the creation of two more focused companies.

Next Steps

• IGT and Everi will seek shareholder approvals for the transaction.
• The companies will work to obtain the necessary regulatory approvals.
• IGT will continue to provide updates to employees through the established communication channels.
• Everi and IGT will file relevant materials with the SEC, including a joint proxy statement/prospectus.

Key Dates