Play it again: To no great surprise, Scientific Games has announced it is to buy the outstanding 19% of the free float of SciPlay that it doesn’t already own as it seeks to refocus on gaming following the news of the sports-betting and lottery division planned sales or IPOs. The all-stock deal involves circa $430m in new Scientific Games shares being issued and values SciPlay at an implied enterprise value of $1.9bn or 9.4x consensus EBITDA for 2022. The tidying up exercise comes at a fortuitous time, according to Truist, giving Scientific Games all the potential upside from leveraging the company’s new games-centric strategy. Jefferies said the logic of the deal was “sound from a complexity and cost perspective.”
“Overall, SGMS remains among the most active transformational catalyst stories in our coverage at present, based on new leadership, a refined and appropriate balance sheet and simplified structure,” the Jefferies team added. “These all imply considerable upside.”
Meet the new boss: The strategic reverse is, as Jefferies said, a “rearrangement of the furniture” that also involves the sale of the lottery and sports-betting units which, as the company previously noted, will raise cash to pay down the substantial debt burden. Note in this regard this deal is all-stock rather than cash. SciPlay has enjoyed a brief period of limited independence having been originally spun out from Scientific Games only in 2019. Scientific Games received circa $340m at the time, though according to Truist $30m went on fees. Which only goes to prove that the true winners from constantly evolving and revolving corporate activity are the advisors.
Also available in today’s weekend edition of Earnings + More:
- MGM/Entain analyst update
- Bragg Gaming Q2 pre-announcement
- June GGR for Massachusetts and Louisiana
- Accel analyst update
- Gaming REIT analysis
