* GTECH to pay $4.7 bln in cash and stock
* To take on $1.7 billion of IGT's net debt
* New company will list on NYSE, delist from Milan
* GTECH shares rise 3.5 pct
(Adds Breakingviews link)
By Francesca Landini and Claudia Cristoferi
MILAN - July 16 Italy's GTECH will buy
U.S. slot machine maker International Game Technology
for $6.4 billion including debt, shifting the lottery operator's
centre of gravity away from its struggling domestic market.
The acquisition of Las Vegas-based IGT is the largest
foreign acquisition by an Italian company this year and defies a
trend of firms in Italy falling prey to overseas suitors as the
local economy stagnates.
IGT makes popular slot machines bearing brands such as that
of TV show "Wheel of Fortune" and science fiction film "Avatar".
By buying the firm, GTECH - the world's No.1 lottery operator -
will become a major global player in the casino business and
strengthen its foothold in the growing U.S. gaming market.
The comparison between the Italian and U.S. sectors is
stark: Total net spending for gaming in Italy fell 6.6 percent
last year, while it rose 6.7 percent in the United States -
above the average global growth rate of 4.2 percent.
GTECH will pay $4.7 billion in cash and shares for IGT and
will also take on $1.7 billion of the U.S. firm's net debt. The
total $6.4 billion deal value is above GTECH's own market
capitalisation of $4.4 billion.
The price surpasses carmaker Fiat's $4.35 billion
all-cash January purchase of the stake in Chrysler it did not
The offer comprises $13.69 in cash per IGT share plus 0.1819
shares of a new company to be formed after the acquisition, and
represents a 18 percent premium on IGT's closing share price on
With the purchase of IGT, GTECH would derive more than half
of its around $4.1 billion revenues from foreign operations. It
currently makes 60 percent of sales in Italy, which is
struggling to emerge from its longest recession in 70 years.
"With limited overlap in products and customers, the
combined company will enjoy leading positions across all
segments of the gaming landscape," GTECH Chief Executive Officer
Marco Sala, who will become the CEO of the new company.
STOCK MARKET SHIFT
GTECH has national lottery concessions in Italy and several
state lottery concession in the United States. It also sells
gaming scratchcards, as well as providing lottery services to
third parties in other nations.
The company, controlled by two wealthy Italian families with
interests ranging from publishing to insurance, is not new to
aggressive expansion deals.
In 2006, under the name of Lottomatica, the Italian company
bought U.S.-listed GTECH in a deal worth at the time around 4
GTECH said on Wednesday that it plans to move its stock
market listing to the New York Stock Exchange from Milan,
depriving the Italian stock market of one of its 40 blue chips.
IGT and GTECH will combine under a newly formed holding
company, which will be based in the United Kingdom.
GTECH, which had said last month it was in talks with IGT,
said the deal is expected to generate $280 million in annual
cost savings by the third year after the closing of the
Shares in GTECH were up about 3.5 percent at 0837 GMT,
outperforming Italy blue-chip index which was 1.2
percent higher, as traders and analysts said future cost savings
were higher than expected.
GTECH said it expects to finance the cash portion of the
deal through a combination of cash it has currently available
and new financing.
The company has already received binding commitments of
$10.7 billion from Credit Suisse, Barclays and Citigroup to
finance the deal.
Credit Suisse, Barclays and Citigroup were financial
advisers to GTECH on the deal. Morgan Stanley advised IGT.
($1 = 0.7376 Euros)
(Additional reporting by Supriya Kurane and Giancarlo Navach;
Editing by Lisa Jucca and Pravin Char)