Slots maker Scientific Games looks to scoop NYX Gaming for $775M.
Scientific Games (SG) is one of the largest suppliers of lottery, gambling and interactive gaming content in the world. Headquartered in Las Vegas, Nevada, the company holds offices on six continents, and is renowned for introducing the very first instant lottery ticket in 1974, one year after its inception.
In the last few years, SG has been on a strategic, acquisition-based warpath. It spent $1.5 billion to purchase the world’s third largest slots maker, WMS Industries, in 2013. The following year, Scientific Games scooped up another major rival, Bally Technologies for $5.1 billion.
Currently SG is the only live and online gambling device manufacturer large enough to come anywhere close to rivaling the global leader, International Game Technology (IGT). However, they have their eye on another prize, and it could finally push the Nevada games manufacturer into the lead.
Scientific on the Hunt for NYX Gaming
According to reports that surfaced this week, Scientific Games is on the hunt once more. This time, they’ve got their eyes on NYX Gaming, a Canada-based company that deals mostly in online and digital gambling content.
The company said it’s prepared to spend approximately $775 million to acquire NYX. That figure includes the purchase price and assumed debt. The news set the market alight yesterday. By mid-morning, shares in NYX (NYX.V) jumped 106% to $2.33 on the Toronto Venture Exchange. Shares in Scientific Games (Nasdaq: SGMS) have held steady through the news.
Both companies have already undertaken due diligence in the process. Scientific Games sought the financial advise of Deutsche Bank Securities. It also employed legal advisers from Cravath, Swaine & Moore LLP, McMillan LLP and Appleby (Guernsey) LLP.
NYX Gaming acquiesced to the sell following the financial wisdom of Lazard and Macquarie Capital, with legal advice coming from Latham & Watkins LLP, Carey Olsen LLP and Stikeman Elliott LLP.
A joint statement from both companies confirmed successful negotiations in the matter. Scientific Games will spend $2.40 per share to purchase NYX.
The terms of the deal must still receive the approval of NYX shareholders. Beyond that, if no legal challenges arise from securities regulators, the paperwork will commence. Representatives of SG and NYX agreed the acquisition should be be finalized by the first quarter of 2018.
Slots Makers Expanding Into Online Sports Betting
Wrangling in their rivals isn’t the only agenda for Scientific Games. A statement from the company eludes to their interest in the online sports betting market.
In a press release, Scientific called NYX “one of the fastest growing B2B real-money digital gaming and sports betting platforms in the world”. Of all the gambling-related businesses the company already operates in, both on land and online, sports betting is the least of them.
“This strategic and financially compelling acquisition combines NYX Gaming’s premier digital gaming and sports betting platforms and expansive distribution network to our own global, industry-leading content, technologies and digital products and services,” said SG President and CEO Kevin Sheehan.
Investment analyst David Katz of Telsey Advisory Group LLC was impressed with the strategic netting of NYX. He said this deal “positions the company for the prospective proliferation of legal sports betting and online gaming in the U.S. over time”.
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