Mergers and Acquisitions

Scientific Games Offers SciPlay 11 Percent Premium in Buyout Bid

Shares of social casino developer SciPlay Corp. (NASDAQ:SCPL) are soaring Thursday. That’s after former parent company Scientific Games (NASDAQ:SGMS) offered to acquire the 19 percent of the company it doesn’t already own. It would be an all-equity deal valuing the target at an 11 percent premium to its July 14 closing price.

SciPlay executives preparing to ring the bell at the Nasdaq market site in 2019, seen above. Scientific Games is offering to buy the company. (Image: Twitter)

In midday trading, SciPlay stock is higher by almost 13 percent. SciPlay investors would receive 0.25 shares of Scientific Games equity for each share they currently own, terms that imply an enterprise value of $1.9 billion.

Formerly the social gaming division of Scientific Games, SciPlay was spun off from that company in 2019. SciPlay’s well-known offerings are Jackpot Party, Quick Hit Slots, Gold Fish Casino Slots, Hot Shot Casino, 88 Fortunes, Bingo Showdown, and Monopoly Slots. The games are free to play but feature in-app purchases.

Scientific Games currently owns 81 percent of the common equity and 98 percent of the voting stock in SciPlay.

Scientific Games Sees Value

In a letter to the SciPlay board, Scientific Games extols the virtues of a combination, noting the combined entity can deliver more value for investors than the companies can on their own.

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 $7.0 billion,” according to the letter.

The move on SciPlay extends a busy stretch for the Las Vegas-based slot machine maker and gaming technology provider. In late June, the company said it’s divesting its lottery and Don Best sports wagering businesses.

Those deals could come in the form of an initial public offering (IPO), a merger with a special purpose acquisition company (SPAC), or sales or a merger with another firm. Last week, rumors surfaced that Scientific Games could list the lottery business in Australia.

Expecting Speedy Deal

Because of its ties with SciPlay, Scientific Games isn’t performing due diligence, and it believes “a transaction would be seamless.”

The suitor did, however, note it’s only interested in the transaction it’s proposing, and that it’s not expected “to vote in favor of any alternative sale, merger, or other corporate transaction involving SciPlay, nor divest or sell any portion of our ownership interest.”

Scientific Games adds that if the deal is consummated, it will be immediately accretive. A time frame for closure or how long SciPlay has to respond was not mentioned in the statement.

Todd Shriber

Gaming Financials, Casino Business----Todd Shriber got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long/short hedge fund, where he specialized in trading sector and international ETFs leading up to and during the financial crisis. Currently, he analyzes, researches, and writes on ETFs for a variety of Web-based publications and financial services firms. Shriber has been quoted in Barron's, CNBC.com, and The Wall Street Journal. His work has been published on sites such as Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and Nasdaq.com. He joined the Casino.org news writing team in 2019, and lives in Southern California, where he enjoys golf and taking his black lab to the dog park. When in Las Vegas, he likes to wager on college football, the NBA, three-card poker, and roulette, even though he knows better. Email: todd.shriber@casino.org

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Todd Shriber