The Nevada Gaming Commission gave final approval Thursday for a $1.5 billion buyout of slot machine manufacturer WMS Industries by lottery provider Scientific Games Corp.
Commissioners had few questions about the company, which is being licensed in Nevada for the first time. Commissioners said a detailed presentation about the transaction and the company was made during a nearly two-hour long hearing in front of the Gaming Control Board earlier this month.
Thursday’s hearing in front of the gaming commission took less than 30 minutes.
Scientific Games is headquartered in New York. It’s largest shareholder is financier Ronald Perelman, who is ranked 27th on the Forbes 400 list of billionaires with a net worth of $14 billion. Perelman, who owns 38 percent of Scientific Games, attended the control board meeting but was excused from attending the commission meeting.
During the control board hearing, Scientific Games officials said the merger would result in $100 million in cost savings.
The company intends to maintain WMS’s 145-person sales and service headquarters in Las Vegas.
Scientific Games CEO Lorne Weil told the control board hearing that post merger, the company will separately operate two divisions, gaming and lottery.
Weil said the combined companies would have $600 million in pretax earnings on a pro forma basis in 2013.
Scientific Games’ systems business would be integrated into WMS’s slot machine operations. At the same time, WMS’ slot machine content and game themes would be utilized in Scientific Games’ lottery business.
Scientific Games Executive Vice President William Huntley will oversee the overall Scientific Games Gaming group.
Current WMS President Ken Lochiatto will head the WMS portion of the gaming division and Scott Schweinfurth, the current chief financial officer of WMS, will be the chief financial officer of Scientific Games’ Gaming group. Current WMS Orrin Edidin will become the vice president and chief gaming development officer for the company.
The transaction has been approved by WMS shareholders and the Federal Trade Commission. There are still 11 state regulatory approvals needed before the deal, which was announced on Jan. 30, can close.
Three investment banks have agreed to fund the transaction, in which Scientific Games will pay $26 per share for WMS. The merger will leave Scientific Games with $3 billion in debt, as well as a $300 million line of credit for future expansion.
Scientific Games is primarily a lottery service provider to several U.S. states and various countries around the world. During the control board hearing, Scientific Games CFO Jeffrey Lipkin said overall lottery sales worldwide were $275 billion annually, with $65 billion coming from the United States.
In other action, the gaming commission approved a marketing agreement between Golden Gaming and Gibraltar-based 888 Holdings in which the tavern operator could deliver its customers as online poker players to a website that includes Treasure Island.
Under terms of the exclusive marketing agreement, Golden Gaming can sign up customers from its three Pahrump casinos and its 40 wholly owned statewide taverns operations to play online poker on a planned website that will be operated by 888 Holdings.
Golden Gaming would share in a percentage of the gaming revenues with 888 Holdings.
Golden Gaming will not have any role in the operation of the website, and is only a marketing vehicle to deliver players. The agreement allows 888 Holdings to expand its online gaming operation into the locals market and Pahrump. Golden Gaming is expected to market the 888 website through various interactive programs and other means.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Follow @howardstutz on Twitter.