LAS VEGAS, July 15, 2021 /PRNewswire/ -- Scientific
Games Corporation (NASDAQ: SGMS) (the "Company" or "Scientific
Games") today announced that it has submitted to the Board of
Directors of SciPlay Corporation (NASDAQ: SCPL) ("SciPlay") a
proposal for Scientific Games to acquire the remaining 19% equity
interest in SciPlay that it does not currently own in an all-stock
transaction, following which SciPlay would become a wholly-owned
subsidiary of Scientific Games (the "Proposed Transaction").
This Proposed Transaction is another important step forward on
the strategy Scientific Games recently announced to become a
content-led growth company with a particular focus on digital
markets and unlock the value of the Company's products and
technologies. SciPlay fits perfectly into Scientific Games'
focus on building engaging content and launching great games more
fully cross-platform.
Scientific Games expects the transaction to be immediately
accretive to the value of the Company's shares offering SciPlay
shareholders a premium for their investment and the opportunity to
participate in the upside potential of Scientific Games as it
transforms its portfolio and executes on its strategy to drive
long-term sustainable growth and significant shareholder value.
Scientific Games has delivered its proposal to SciPlay's Board
of Directors. The full text of the letter sent to SciPlay's Board
of Directors is below:
July 15, 2021
VIA EMAIL:
Board of Directors
SciPlay Corporation
6601 Bermuda Road
Las Vegas, NV 89119
Dear Members of the Board:
Scientific Games Corporation ("we" or "SGMS") is
pleased to propose a merger with SciPlay Corporation
("SciPlay") pursuant to which SciPlay's shareholders, other
than SGMS and its subsidiaries, would become direct shareholders of
SGMS in a tax-free transaction (the "Transaction"). In
the Transaction, SciPlay shareholders, other than SGMS and its
subsidiaries, would receive 0.250 shares of SGMS common stock for
each share of SciPlay Class A common stock they own, which would
imply an enterprise value of $1.9
billion and purchase multiple of 2021E consensus EBITDA of
10.1x and 2022E consensus EBITDA of 9.4x. The Transaction implies a
premium of 11% based on the SGMS and SciPlay respective closing
stock prices as of the close of business on July 14, 2021, the last trading day prior to the
proposal, and a premium of 10% based on the thirty-day volume
weighted average price ("VWAP") for SciPlay Class A common
stock.
We believe a merger of SGMS and SciPlay will deliver significant
operational, strategic and financial benefits and drive shareholder
value in excess of what each company could generate on a standalone
basis. Further, we believe SciPlay public shareholders will benefit
from increased trading liquidity as a result of being part of a pro
forma entity with a market capitalization of $7.0 billion (based on the closing share prices
of SGMS and SciPlay on July 14, 2021)
and a public float that would be approximately 18x larger than
SciPlay today.
Through our existing collaboration with SciPlay, we believe a
transaction would be seamless and we look forward to fully joining
forces with SciPlay's talented leadership team and employees to
continue innovating on behalf of customers and players.
Key benefits from a combination include:
- Offering premium value for SciPlay shares with the opportunity
to participate in the potential upside of SGMS share ownership as
we transform our company, driving sustainable growth and
significant shareholder value
- Acceleration of SGMS's vision of becoming a leading
cross-platform global game company through the integration of
SciPlay by leveraging content, game mechanics and our new game
development roadmap to create an enhanced player experience across
land-based and digital platforms as we see increasing
convergence
- Positioning SciPlay to accelerate its strategy and expand in
the high growth casual gaming market as part of a combined company
with a strengthened balance sheet, substantial cash flows and
enhanced financial flexibility
-
- SciPlay will be a key component in SGMS's goal of growing our
digital business to be comparable in size with our land-based
business within 3 years
- SGMS recently announced our intent to divest our Lottery and
Sports Betting businesses, which will strengthen our balance sheet
by materially de-levering, while creating the financial capacity to
invest in our largest growth opportunities, including the SciPlay
business
- Giving SciPlay continued access to new content, including the
robust game roadmap that SGMS is advancing, beyond the 2022 expiry
of the current IP Licensing Agreement
- The value of this combination is based on enhancing alignment
of interest and strengthening the combined company's foundation for
growth, rather than opportunities for cost synergies
We believe the proposed Transaction offers speed and certainty
for SciPlay public shareholders. SGMS will not conduct due
diligence and we do not expect consummation of the Transaction to
require any regulatory approvals or the approval of SGMS
shareholders. We expect that SciPlay's Board of Directors will
appoint a special committee comprised entirely of independent
directors to consider our proposal. The approval of such special
committee will be a precondition for us to move forward with the
contemplated Transaction, which will also be subject to the
negotiation and execution of a mutually acceptable merger
agreement.
Currently, SGMS owns approximately 81% of the economic interest
and 98% of the voting interest in SciPlay. In considering this
proposal, it should be noted that, in our capacity as a shareholder
of SciPlay, we are interested only in the Transaction specified
above with respect to the publicly traded shares of SciPlay and
intend to vote in favor of such Transaction. We would not expect,
in our capacity as a shareholder of SciPlay, to vote in favor of
any alternative sale, merger or other corporate transaction
involving SciPlay nor divest or sell any portion of our ownership
interest.
Please note that this proposal is an expression of interest
only, and we reserve the right to withdraw or modify our proposal
in any manner at any time. No legal obligation with respect to the
Transaction or any other transaction shall arise unless and until
execution of a mutually acceptable merger agreement between SGMS
and SciPlay.
We believe it is appropriate for us to publicly disclose our
proposal substantially concurrently with the delivery of this
letter to you, and accordingly we plan to file this letter with the
U.S. Securities and Exchange Commission. Furthermore, as it relates
to this proposal, we have engaged Macquarie Capital as our
financial advisor and Cravath, Swaine & Moore LLP as our legal
advisor, and we encourage the special committee to retain its own
legal and financial advisors to assist in its review of our
proposal. We and our advisors look forward to working with the
special committee and its advisors to expeditiously negotiate and
consummate a mutually acceptable transaction and are available at
your convenience to discuss any aspects of this proposal. Should
you have any comments or questions regarding our proposal or
otherwise, please do not hesitate to contact me.
Sincerely,
Barry L. Cottle
President and Chief Executive Officer
Advisors
Macquarie Capital is serving as financial advisor and Cravath,
Swaine & Moore LLP is serving as legal advisor to Scientific
Games.
Investor Inquiries:
Jim Bombassei, Senior Vice
President of Investor Relations
IR@scientificgames.com
Media Inquiries:
Nick Lamplough / T.J. O'Sullivan
/ Lucas Pers, Joele Frank, Wilkinson Brimmer Katcher, +1 212
355 4449
Forward-Looking Statements
In this press release,
Scientific Games makes "forward-looking statements" within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by words such as
"will," "would," "expect," "believe," "potential," "intended,"
"plan" and "should." These statements are based upon management's
current expectations, assumptions and estimates regarding the
Proposed Transaction, the expected benefits of the Proposed
Transaction, future opportunities for the combined company and
future stockholder value. Forward-looking statements are not
guarantees of timing, future results or performance. Therefore, you
should not rely on any of these forward-looking statements as
predictions of future events. Actual results may differ materially
from those contemplated in these statements due to a variety of
risks, uncertainties and other factors, including the possibility
that the Proposed Transaction will not be agreed to, that the terms
of any definitive agreement with respect to the Proposed
Transaction will be materially different from those described, that
the conditions to the completion of the Proposed Transaction may
not be satisfied on the anticipated schedule or at all, that the
Proposed Transaction may not be consummated or that Scientific
Games may be unable to achieve expected operational, strategic and
financial benefits of the Proposed Transaction, and those factors
described in our filings with the Securities and Exchange
Commission (the "SEC"), including Scientific Games' current reports
on Form 8-K, quarterly reports on Form 10-Q and its latest annual
report on Form 10-K filed with the SEC on March 1, 2021 (including under the headings
"Forward-Looking Statements" and "Risk Factors"). Forward-looking
statements speak only as of the date they are made and, except for
Scientific Games' ongoing obligations under the U.S. federal
securities laws, Scientific Games undertakes no obligation to
publicly update any forward-looking statements whether as a result
of new information, future events or otherwise.
No Offer
This press release does not constitute an
offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any
jurisdiction in which any such offer, solicitation or sale would be
unlawful. Any securities to be offered may not be offered or sold
in the United States absent
registration or an applicable exemption from registration
requirements.
Additional Information and Where to Find It
This
press release relates to a proposal which Scientific Games has made
to acquire the remaining 19% equity interest in SciPlay that it
does not currently own. In furtherance of this proposal and subject
to future developments, Scientific Games and, if a negotiated
transaction is agreed, SciPlay, as applicable, may file a
registration statement, an information statement or other documents
with the SEC. This press release is not a substitute for any
registration statement, information statement or other document
Scientific Games and/or SciPlay may file with the SEC in connection
with the Proposed Transaction.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT, INFORMATION STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY
IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT SCIENTIFIC GAMES, SCIPLAY AND THE
PROPOSED TRANSACTION. Investors and security holders will be able
to obtain copies of these documents (if and when available) and
other documents filed with the SEC by Scientific Games and/or
SciPlay free of charge through at www.sec.gov. Copies of the
documents filed by Scientific Games (if and when available) will
also be made available free of charge by accessing Scientific
Games' website at https://www.scientificgames.com/investors/.
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SOURCE Scientific Games Corporation