Leading slot manufacturer International Game Technology announced that it has sold its British-based Barcrest Group to lottery ticket and system giant Scientific Games for million to million, in a transaction expected to close later this year.
Barcrest was the former AWP machine supplier purchased by IGT in 1998, and the producer of such IGT hits as Top Dollar. IGT bought the company after collaborating with it for years to produce reel-spinning slot games with Barcrest’s mechanical top-box bonuses.
According to a statement, the deal was for a net-cash consideration of about $54 million. IGT could receive an additional $3 million in cash subject to post-closing adjustments. In total, the enterprise value of the transaction could reach about $66 million.
The transaction allows IGT to cut loose a business segment that isn’t as profitable as its other areas. “We see this divestiture as another signal that (IGT) management is focused on exiting non-core businesses that consume resources and have modest growth potential,” Credit Suisse gaming analyst Joel Simkins told investors.
IGT Chief Executive Officer Patti Hart said the sale allows the company to focus on its other business lines. “Scientific Games is an ideal new home for Barcrest, and provides a strategic alignment between both companies’ core objectives,” Hart said.
The announcement came just after IGT beat analyst estimates with its second-quarter earnings, turning in a profit of $69.6 million, or 23 cents per share, up from $25.7 million or 8 cents per share for the same quarter last year.
Revenues also were up slightly to $492.3 million, from a combination of cost-cutting and a 4 percent spike in sales, with 10,200 units moved for the quarter. According to the company, that represents a 10 percent jump in North American sales compared with a 12 percent dip in other markets. Officials say a larger mix of MegaJackpots wide-area progressive games inched up the company’s revenue per unit.
In other IGT news, the company announced an exclusive agreement with VLT operator Caribbean CAGE LLC to supply several thousand video lottery terminals to licensed bancas in the Dominican Republic. The games will be connected to the IGT Casinolink tracking and accounting system.
“This agreement with Caribbean CAGE highlights IGT’s expertise in the global VLT market and in gaming management solutions,” said Hart. “Partnering with this industry-leading gaming company in the Caribbean and Latin America has given IGT an opportunity to launch our successful VLT products in the Dominican Republic. CAGE is well-known in the industry for delivering great gaming experiences to its players, which makes this partnership with IGT a perfect fit.”
“This strategic agreement with IGT is a dynamic and exciting business opportunity for us to expand our reach across the Caribbean and Latin America,” said Robert L. Johnson, chairman of the RLJ Companies and majority owner of CAGE. “IGT’s track record of delivering world-class technology—including terminals, games and systems—will help CAGE empower small businesses to generate sustainable cash flow in these challenging economic times.”
IGT will begin by delivering several hundred VLTs in the spring of 2011, and will continue shipping additional units to the Dominican Republic on a monthly basis. A large percentage of the games will consist of the Game King 6.0 Multi-Game suite, featuring the company’s top blackjack, poker and video slot themes.