June 13, 2014 / 5:05 PM / in 4 years

Exclusive: Lottery operator GTECH, Perelman vie for International Game - sources

NEW YORK/LONDON (Reuters) - Lottery operator GTECH SpA GTCH.MI and billionaire Ron Perelman’s MacAndrews & Forbes Holdings are competing to buy Las Vegas slot machine maker International Game Technology (IGT.N), people familiar with the matter said on Friday.

Shares of IGT jumped nearly 11 percent to $15.84 in midday trading on news of the bidders, giving it a market value of close to $4 billion.

Private equity firm Apollo Global Management LLC (APO.N), a seasoned investor in the U.S. gaming sector and a co-owner of Caesars Entertainment Corp (CZR.O), is also pursuing a bid, as is buyout firm Carlyle Group LP (CG.O), the people said.

The parties made preliminary takeover offers for IGT and are preparing to submit binding bids in the next few weeks, the people said, asking not to be named because the matter is not public.

On Monday, Reuters reported that IGT has hired Morgan Stanley (MS.N) to explore a sale and has received interest from gaming companies and private equity firms.

IGT, GTECH, Apollo and Carlyle declined to comment. A MacAndrews & Forbes representative did not respond to requests for comment.

IGT makes popular slot machines bearing a variety of brands such as that of television show “Wheel of Fortune” and science fiction film “Avatar.” The company branched out into social gaming with the 2012 acquisition of Double Down Interactive LLC, developer of the DoubleDown Casino on Facebook Inc (FB.O).

The company had $2.2 billion of debt at the end of March, suggesting the deal’s enterprise value could approach $6 billion.

Italian gaming company GTECH, known as Lottomatica Group until a year ago, is the world’s largest operator of lotteries. It operates Italy’s Lotto game and several U.S. state lotteries. It has a market capitalization of around $4.6 billion.

MacAndrews & Forbes Holdings Inc is a diversified holding company wholly owned by billionaire investor Ron Perelman. With interests in public and private companies, it serves as Perelman’s primary investment vehicle.

    Among other investments, MacAndrews has a nearly 40 percent stake in Scientific Games Corp (SGMS.O), a New York-based lottery operator at which Perelman is chairman.

    GTECH is roughly 60 percent owned by Italy’s De Agostini Group, which expanded its Lottomatica empire with the 2006 acquisition of U.S. gaming company GTECH.

    The company expects strong synergies from a potential combination with IGT, and may also team up with a private equity firm to help with the purchase, two people said.

    Despite serious bid attempts by both GTECH and MacAndrews & Forbes, it is not clear if they would be preferred buyers. IGT management has indicated it would prefer a sale to private equity, according to several people familiar with the situation.

    Any private equity buyer would require the necessary gaming licensing to own IGT. Carlyle may be pursuing a strategic partnership for that reason, some of the people said. Apollo is an investor in Caesars alongside TPG Capital LP.

    A potential sale of IGT would follow several deals involving slot machine makers in the past year.

    Last year, Bally Technologies BYI.N purchased gaming equipment provider SHFL entertainment for $1.3 billion, while Scientific Games purchased slot machine maker WMS Industries for $1.5 billion.

    Reporting by Soyoung Kim and Greg Roumeliotis in New York, Pamela Barbaglia in London, additional reporting by Mike Stone; Editing by David Gregorio

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