Another takeover bid is in the air as news of a Scientific Games Sciplay takeover rumours become reality by taking to the iGaming newswires in force.
Currently, Scientific Games does not own SciPlay, a social gaming operator but the New York-listed firm has now proposed to take over the 19% remaining equity interest in SciPlay. For each Sciplay Class A common stock share they own, shareholders of SciPlay (excluding Scientific Games and its subsidiary) will get 0.250 shares of Scientific Games common stock with this proposal. This would mean a purchase multiple of the estimated EBITDA of 10.1x in 2021, and 9.4x in 2022 with a $1.9bn enterprise value.
Recall that Scientific Games recently announced plans to become a growth firm led by content and particularly focusing on digital markets, so this proposal is part of that plan. One of the moves it made to implement this growth was to sign a deal with Evolution Gaming earlier in May.
Letter Regarding Scientific Games Sciplay Takeover
In a letter addressed to the SciPlay Board, Scientific Games stated that:
They believe that a fusion of SciPlay and SGMS will deliver significant financial strategic, and operational benefits and also drive shareholder value more than what each firm would have generated working independently.
To further embolden the Scientific Games Sciplay takeover move, the letter further stated that Scientific believes that the increased trading liquidity will be beneficial to SciPlay public shareholders because they are part of a pro forma body with $7.0bn market capitalization (based on SciPlay and SGMS closing share prices on the 14th of July) and a public float touted to be larger than SciPlay today by approximately 18x.
Scientific Games also explained that they believe that a transaction will be seamless via the existing partnership with SciPlay and that they cannot wait to work with the talented employees and leadership teams from SciPlay so that both companies can keep on innovating on behalf of players and customers. By transaction, they mean an 11% premium based on the respective closing stock price of both SciPlay and Scientific as of when business closed on Wednesday which was the last day of trading before the proposal, and also a 10% premium based on the 30-day volume-weighted average worth of shares in SciPlay.
Approximately 98% of the voting interest 81$ of the economic interest in SciPlay is currently owned by Scientific Games as SciPlay was carved out of the latter in May 2019. On Wednesday shares in NSQ: SGMS (Scientific Games Corporation) closed at 68.07 dollars per share in New York which is 2.24% lower while shares in NSQ: SCPL (SciPlay Corporation) closed at 15.36 dollars which is 3.76% lower on Wednesday too.
About Scientific Games
Located in Las Vegas, Scientific Games prides itself as a technology innovator to the global digital, lottery, and gaming industries driving innovation and championing groundbreaking ideas. The firm also boasts a robust workforce of industry professionals with several years of experience. Scientific Games is a global leader in entertainment, offering thrilling games, services, and systems for sports, online gaming, social gaming, lottery, and land-based casinos. It is also a partner of Evolution to bring Lightning Roulette to land-based casinos globally which could be the beginning of more live game shows from both brands heading to the land-based sphere.