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IGT sells British-based slot machine developer

Slot machine manufacturer International Game Technology announced Wednesday it sold its Britain-based Barcrest Group in a deal that could bring up to $66 million.

The transaction with lottery equipment provider Scientific Games could close this year.

Barcrest develops slot machines and game content for casinos in the United Kingdom and other European markets. IGT acquired the manufacturer in 1998 and grew the business over the last decade. Barcrest once led the United Kingdom in market share.

According to a statement, the deal was for a net-cash consideration of about
$54 million. IGT could get an additional $3 million in cash subject to post-closing adjustments. The enterprise value of the transaction could reach about $66 million.

Several gaming analysts said the U.K. market was composed of low-cost, low-profit slot machines, compared with the United States and other markets.

Macquarie Securities gaming analyst Chad Beynon said the U.K. once had roughly 240,000 slot machines in pubs, clubs, bingo halls and casinos. However, replacement sales in the past three years have been relatively low.

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 noncore businesses that consume recourses and have modest growth potential,” Credit Suisse gaming analyst Joel Simkins told investors.

IGT Chief Executive Officer Patti Hart said the sale allows her 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.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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