Las Vegas-based Scientific Games Corp. (NASDAQ:SGMS) no longer plans to acquire the 19% balance of SciPlay it does not yet own, according to a report on Nasdaq.com. Scientific Games currently controls 98% of the voting shares in the company and 81% of the stock at large.
The smaller company’s stocks fell as much as 21% on the news.
Back in July, the world lottery giant who has recently decided to divest its lottery business in a bid to assert dominance on the global iGaming stage made an all-stock offer to merge with/consume the social games developer and provider.
Just Not the Right Time
Company statements presented what may have seemed to some as conflicting views of the circumstances surrounding the failure to complete with SciPlay Corporation stating: “Based on its review and analysis, [our]
Special Committee rejected Scientific Games’ initial proposal, and actively engaged with Scientific Games to negotiate terms that it believed better reflects the value of SciPlay.”
Scientific Games CEO and President, Barry Cottle focused on his company’s existing shareholders, stating: “In line with our approach to capital management and disciplined M&A we have decided that continuing to pursue this opportunity would not be prudent for our shareholders at this time.”
SciPlay shareholders who did not already own Scientific Games shares would have been given ¼ of an SGMS share for each of their SciPlay certificates.
Scientific Games announced in late October that it would sell the lottery arm of its business to Brookfield Business Partners L.P. in a cash deal valued at $6.05 billion. Several years ago the lottery giant elbowed its way into the online gambling space in a series of mergers and acquisitions culminating with the acquisition of “hungry hungry hippo” M&A masters NYX Gaming which had already consumed Betdigital, NextGen Gaming, OpenBet, and sidecity.net. Further Scientific Games acquisitions included ELK Studios, Lightning Box (see here), and SidePlay.
Sharing the Ball of Wax
Not to be outdone by another ten thousand pound gorilla, former IGT CEO, Walter Bugno announced in mid-November that his new company, Games Global would become a market-leading supplier of online gaming content with the purchase of the entire Microgaming portfolio of more than 3,000 games along with dozens of smaller gaming studio; the Quickfire aggregation platform, and the Microgaming progressive jackpot network, the worlds largest.
While IGT and Scientific Games were rivals for decades, they also often cooperated on the world lottery stage, becoming co-vendors when lottery commissions simply couldn’t choose between the two behemoths. If Bugno’s Games Global and Scientific Games go head to head for market dominance, Bugno may have a certain advantage as his company is funded with private equity and can operate with certain freedoms a publicly-traded concern cannot.
Scientific Games’ head Barry Cottle smoothed everything out when he added: “SciPlay remains a strategic asset and has the opportunity to drive meaningful value as it grows its social casino market share and expands into the $20B casual genre leveraging its expertise in engagement and monetization. We will continue to invest in this sector in a disciplined manner. Importantly, as we advance our strategy, we will continue to take a holistic approach to capital management as we focus on allocating capital to drive growth in earnings per share.”
Source: SciPlay Plunges 21% After Sale Talks With Scientific Games End, Bloomberg, December 22, 2021