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IGT’s big return to Nevada will boost state’s gaming manufacturing

For many, July 2014 was a sad time for Nevada gaming, the month when a group of Italian lottery company executives using the name Gtech Holdings, acquired IGT, the shorthand version of International Game Technology.

It was sad because a stalwart of the state’s gaming business, founded by the legendary Si Redd in 1990, was being sold off to foreign buyers half a world away for $6.4 billion.

What was to become of IGT, a Silver State institution that brought fame to Nevada as the leading manufacturer of video poker games and slot machines?

Last week, we learned that happy days are here again.

The Italian core group of executives decided to spin off a portion of the company and merge it with Las Vegas-based Everi Holdings Inc. and base the gaming equipment manufacturing group in Nevada.

Taking IGT name, ticker

The newly formed company would be known as IGT, trade on the New York Stock Exchange with the IGT ticker symbol, and put its management operations in Las Vegas with its primary manufacturing location in Reno where it all started.

It was a $6.2 billion deal that isn’t expected to close until late this year or early 2025. Vince Sadusky, the company’s current CEO, will keep that role, and Michael Rumbolz of Everi will become the chairman of the new company’s board of directors.

For years, UNLV Business Hall of Fame member Phil Satre, currently chairman of the Wynn Resorts Ltd. board of directors, served as chairman of IGT’s board.

The Italian group, which relocated IGT’s corporate headquarters to London, will keep its lottery business. Before the company was known as Gtech, it held the name Lottomatica.

The reason why it’s going to take so long for the deal to be wrapped up is that IGT has operations in more than 100 countries worldwide. In addition, the company’s slot machines and gaming systems are used in commercial and tribal casinos across the country.

Daron Dorsey, executive director of the Las Vegas-based Association of Gaming Equipment Manufacturers, said both IGT and Everi are members of his organization.

Industry due for change

He said he wasn’t too surprised by the transaction, noting that the industry was due for change.

“Within the space with these publicly traded companies, our sector does go through cycles of M&A (merger and acquisition) activity and acquisitions and that just seems to be where the timing seems to be right for a few of those different companies to do something like this,” Dorsey said.

Dorsey said it will be good for Nevada to return to the global stage for slot machine manufacturing, marketing and distribution.

“We’ll see a greater Nevada presence with some of these iconic brands and iconic companies that operate on a global scale,” he said.

Josh Swissman, founding partner and managing director of Las Vegas-based GMA Consulting, said all indications pointed to IGT making a move, but he didn’t see the connection with Everi coming.

“IGT was going through a strategic review of their whole business anyway, so you know that something dramatic and game changing is typically the outcome,” Swissman said.

“I didn’t see this in particular as the outcome, but it does make sense, right? IGT had become this really big organization that had all of these very significant components,” he said. “Gtech, the Italian company, purchased IGT however many years ago that was and it effectively became a slot and casino company and a lottery company all at once.”

Splitting the company gave IGT the opportunity to focus on key components within the organization.

“Sometimes when companies get too big like that and there aren’t a lot of synergies across the different business units, it kind of makes sense to break up those business units again because you can allow separate, discrete management teams that become very focused on the individual components of the business.”

More deals ahead?

Brendan Bussmann, a gaming industry analyst with Las Vegas-based B Global, said he expects the IGT-Everi move may be the first of other similar transactions.

“Obviously IGT had been looking at options for its business for a while, and I wasn’t surprised by it,” Bussmann said. “I’m glad to see them coming back to Vegas. But I think this is probably one of many potential M&A activities you’re going to see over the next few years as it relates to the supplier world.”

Nevada will be the beneficiary of the move, he said, because it means more quality people will be coming to the state to join the new company.

While most of the news about IGT-Everi is good, one analyst in a report to investors said the length of time necessary to conclude the deal may leave some investors on the sidelines for now.

David Katz, an analyst with the New York-based Jefferies Group, said the new entity appears to be a good long-term investment, but because of the long runway to get there, he’s recommending caution.

“Given the time to closing, need for capital raising by IGT and the currently sensitive regulatory environment, we believe a conservative approach is warranted,” he said in a note to investors last week. “Thus, we are downgrading the shares to Hold from Buy, with a $13 price target.”

At midweek last week, Everi shares were trading a $9.45 a share on the Nasdaq exchange.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.

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