Shares of social casino developer SciPlay Corp. (NASDAQ:SCPL) are soaring Thursday after former parent company Scientific Games (NASDAQ:SGMS) offered to acquire the 19 percent of the company it doesn’t already own in an all-equity deal valuing the target at an 11 percent premium to its July 14 closing price.
In midday trading, SciPlay stock is higher by 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.
This proposed transaction is another important step forward on the strategy Scientific Games recently announced to become a content-led growth company with a particular focus on digital markets and unlock the value of the Company’s products and technologies,” according to a statement. “SciPlay fits perfectly into Scientific Games’ focus on building engaging content and launching great games more fully cross-platform.”
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.
“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 $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), sales or a merger with another firm. Last week, rumors surfaced that Scientific Games could list the lottery business in Australia.
Expecting Speedy Deal
Due to 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.
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