Italian gambling has woken up to a seismic M&A deal after it was confirmed that IGT Plc had agreed to sell its Lottomatica B2C gaming and sports betting units to Gamenet SPA in a transaction valued at €950 million.
After revealing that it will divest its Lottomatica ‘Scommesse‘ (sports betting) and ‘Videolot Rete‘ (B2C machines), IGT informed its stakeholders that the technology group’s global gaming segment will place an increased focus on ‘core competency as a B2B service provider’.
Updating its investors, IGT stated that the transaction had been recommended to ‘rebalance the business’, allowing the firm to ‘improve its future profit margins and cash flow generation’.
The transaction has valued Lottomatica B2C units at an enterprise value of approximately €1.1 billion. The assets sold would have generated circa €207 million in aggregated adjusted EBITDA in 2019.
The proceeds from the transaction, according to IGT, will be used to reduce the firm’s long-term debt of $7.6 billion (as disclosed in FY-2019 accounts).
Should the deal be sanctioned, the gambling group will maintain its heritage Lottomatica lottery division as its sole B2C trading unit.
“The transaction enables IGT to monetize its leadership positions in the Italian B2C gaming machine, sports betting, and digital spaces at an attractive multiple to comparable Italian transactions, providing us with enhanced financial flexibility,” said Marco Sala, CEO of IGT.
“Aligning with our recent reorganization, the favourable rebalancing of our business and geographic mix reframes and simplifies our priorities while improving the Company’s future profit margin, cash flow generation, and debt profile.”
Financed by US private equity group Apollo Global, Gamenet SPA has agreed to pay an upfront cash settlement of €725 million by 31 December, with the remaining €125 million payable by 30 September 2022.
Gamenet has continued its aggressive M&A expansion to dominate Italian land-based gaming and retail sports betting. Closing 2018, Gamenet secured its position as Italy’s largest sportsbook network, having acquiring all of GoldBet’s retail points for €300 million.
The agreed transaction will likely receive close scrutiny from Italy’s competitions and markets authority (AGCM), as Gamenet’s current market portfolio accounts for more than 2,000 betting concessions, while also servicing a retail betting network of over 900 betting points.
Gamenet operates an active land-based gambling portfolio of 70 gaming halls and +38,000 gaming machines across Italy.