* GTECH to pay $4.7 bln in cash and stock
* To take on $1.75 billion of IGT's net debt
* New company will list on NYSE, delist from Milan
* GTECH shares rise 5 pct, IGT also up in pre-market trade
(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 $4.7 billion, shifting the lottery operator away from its
struggling domestic market and making it a major player in the
The purchase of Las Vegas-based IGT is the largest foreign
acquisition by an Italian company since 2009, excluding Fiat's
takeover of Chrysler which took place in several
The deal, which will create a group with annual revenues of
more than $6 billion, bucks a trend of Italian businesses
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 it, GTECH - the world's No.1 lottery operator - will
also 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 said on Wednesday that it would 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 offer comprises $13.69 in cash per IGT share plus 0.1819
shares of a new company to be formed, and represents a 18
percent premium on IGT's closing share price on Tuesday.
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," said GTECH Chief Executive
Officer Marco Sala, who will become the CEO of the new company.
STOCK MARKET SHIFT
GTECH runs Italy's popular Lotto game, whose lucrative
licence expires in 2016, and manages several state lottery
concessions in the United States. It also sells gaming
scratchcards in Italy and abroad.
The company said last month it was in talks with IGT, which
has was put up for sale this year after its stock slid by almost
a third due to falling revenues. The Las Vegas firm was also
courted by Apollo and other U.S. private equity funds.
The deal is expected to generate $280 million in annual cost
savings by the third year after the closing of the acquisition,
GTECH shares were up about 5 percent by 1115 GMT,
outperforming Italy's blue-chip index. IGT shares were up 11.5
percent in pre-market trade.
"The industrial logic of the deal is clear and synergies are
very significant," said Equita analyst Domenico Ghilotti, saying
the $280 million savings figure was double his estimates.
GTECH said it will move its stock market listing to New York
from Milan, depriving the Italian bourse of one of its 40 blue
chips. IGT will also be delisted from Wall Street.
The two companies will be merged into a newly created
holding company to be based in the United Kingdom - a move which
analysts said could help lower its tax bill and would also give
better access to international capital markets.
The transaction, subject to regulatory clearance, is due to
be completed by the second quarter of next year.
GTECH, controlled by two wealthy Italian families through
the De Agostini group that has interests ranging from publishing
to insurance, is not new to aggressive expansion deals.
Formerly known as Lottomatica, it was renamed after
acquiring U.S. listed GTECH in 2006 for $4.7 billion.
After the merger, existing IGT and GTECH shareholders will
own 20 percent and 80 percent respectively of the new company.
The De Agostini group, which owns about 60 percent of GTECH,
will have a 47 percent stake in the new company.
GTECH said it had already received binding commitments for
$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)