June 25 (Reuters) - Australian gaming company Aristocrat Leisure Ltd is in talks to purchase U.S. competitor Video Gaming Technologies Inc for about $1 billion, according to people familiar with the matter.
A deal for Franklin, Tennessee-based Video Gaming Technologies (VGT), which makes slot machines primarily for Native American casinos, would be a big bite for Sydney-based Aristocrat, which has a market cap of over $2.82 billion.
While VGT has been for sale on and off for years, discussions with Aristocrat have been taking place in recent months, said the people familiar with the talks, who asked not to be named because the matter is private. The talks could fall apart at any moment, the people cautioned.
A successful deal would be a significant step for Aristocrat as it continues to expand in the U.S. gaming market.
Representatives for Aristocrat and VGT did not respond to requests for comment.
The makers of slot machines, known broadly as gaming equipment makers, are questioning their strategic relevance as they face an aging population of users. Many are looking to Internet-based gaming as an option for growth in new, younger-demographic markets.
As companies look for relevance on the internet and mobile devices, consolidation has begun in the industry as evidenced by two mergers last year. Bally Technologies Inc purchased SHFL Entertainment Inc and Scientific Games Corp purchased WMS Industries Inc.
Another gaming equipment maker, International Game Technology, is currently exploring a sale, as previously reported by Reuters. (Reporting by Mike Stone; Editing by Meredith Mazzilli)