Scientific Games Corporation has submitted a proposal to the Board of Directors of SciPlay Corporation this week to acquire the remaining 19% equity interest in SciPlay that it does not currently own in an all-stock transaction.
On completion of the transaction, SciPlay would become a wholly-owned subsidiary of Scientific Games.
In a statement, SG marked the deal as another important step forward in its strategy to become a content-led growth company focusing on digital markets while unlocking the value of its products and technologies.
It said: “SciPlay fits perfectly into Scientific Games’ focus on building engaging content and launching great games more fully cross-platform. Scientific Games expects the transaction to be immediately accretive to the value of the company’s shares offering SciPlay shareholders a premium for their investment and the opportunity to participate in the upside potential of Scientific Games as it transforms its portfolio and executes on its strategy to drive long-term sustainable growth and significant shareholder value.”
In the missive to the SciPlay Board, SG President and CEO Barry Cottle underlined the rationale behind the proposal, saying: “We believe a merger of SGMS and SciPlay will deliver significant operational, strategic and financial benefits and drive shareholder value in excess of what each company could generate on a standalone basis.
“Further, we believe SciPlay public shareholders will benefit from increased trading liquidity as a result of being part of a pro forma entity with a market capitalization of $7bn and a public float that would be approximately 18x larger than SciPlay today.”
He added: “Through our existing collaboration with SciPlay, we believe a transaction would be seamless and we look forward to fully joining forces with SciPlay’s talented leadership team and employees to continue innovating on behalf of customers and players.”
Key benefits from a combination, according to Cottle, include premium value for SciPlay shares with the opportunity to participate in the potential upside of SGMS share ownership.
There would also be an acceleration of SGMS’ vision of becoming a leading cross-platform global game company through the integration of SciPlay. This would be achieved by leveraging content, game mechanics and a new game development roadmap to create an enhanced player experience across land-based and digital platforms.
Moreover, the deal would position SciPlay to accelerate its strategy and expand in the high growth casual gaming market as part of a combined company with a strengthened balance sheet, substantial cash flows and enhanced financial flexibility.
“SciPlay will be a key component in SGMS’s goal of growing our digital business to be comparable in size with our land-based business within three years,” said Cottle. “SGMS recently announced our intent to divest our Lottery and Sports Betting businesses, which will strengthen our balance sheet by materially de-levering, while creating the financial capacity to invest in our largest growth opportunities, including the SciPlay business.”