Slot maker IGT says company is exploring ‘strategic alternatives’

Slot machine giant International Game Technology all but confirmed the company is up for sale Monday, saying in a statement it was “currently” exploring “a broad range of strategic alternatives.”

In a one-paragraph comment, IGT said its board of directors and senior management are “currently engaged” in looking at potential “changes to our capital structure and adjustments to our portfolio of businesses.”

The statement comes after reports surfaced last week the gaming industry’s largest manufacturer hired investment bank Morgan Stanley to field sales offers for the company.

The news sent shares of IGT soaring in value on the New York Stock Exchange.

On Friday shares of IGT closed up 10.52 percent after various media reports listed Italian lottery gaming equipment giant GTECH and several private equity groups expressing interest in acquiring IGT, which has corporate offices in Las Vegas and manufacturing headquarters in Reno.

Shares of IGT closed at $15.64 on Monday, down 22 cents or 1.39 percent.

In a statement Monday, GTECH, which is headquartered in Rome, said it was in preliminary talks to buy IGT. The company said it hired financial advisers to negotiate a deal.

In its statement, IGT said “no decisions have been made by the board regarding any particular alternative available to the company and there can be no assurances that any transaction or other strategic change will be entered into as a result of the current exploration of alternatives.”

IGT declined comment beyond the statement.

Until the sales reports surfaced, IGT was seemingly rebounding from an awful spring.

The company laid off 7 percent of its global work force in March to save costs and lowered its fiscal 2014 guidance. In April IGT reported a 66 percent decline in second-quarter earnings and a 15 percent decline in net revenue.

IGT has a market capitalization of almost $4 billion, but is also weighed down with $2.2 billion in long-term debt.

GTECH is 60 percent owned by Italy’s De Agostini Group. The company expanded its Lottomatica Group empire in 2006 with the acquisition of GTECH, which had headquarters in Rhode Island. The company is considered the world’s largest lottery systems provider. It operates lotteries in several U.S. states.

GTECH has a market capitalization of of $4.64 billion.

Among the private equity groups reportedly interested in IGT is MacAndrews & Forbes Holdings, which is controlled by billionaire Ronald Perleman, the majority stockholder of lottery giant Scientific Games Corp. Last year, Scientific Games bought WMS Industries for $1.5 billion.

Apollo Global Management, one of the private equity groups that owns the largest stake in Caesars Entertainment Corp., and Carlyle Group LP are also reportedly in the mix.

At least one company that won’t be bidding on IGT is slot machine rival Bally Technologies. Analysts said a merger between the two gaming equipment giants wouldn’t pass scrutiny under federal anti-trust issues.

Sterne Agee gaming analyst David Bain said a sale of IGT “should unsaddle Bally’s equity multiple.” Bain said IGT’s value has “anchored” Bally’s value in the mind of shareholders.

“Further, should IGT be acquired by a private equity firm, or other non-listed US entity, the space of investible suppliers shrinks considerably to the benefit of Bally, in our view,” Bain said.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.