Citing a desire to increase delivery channels for its products, International Game Technology (IGT) has formally announced that it has struck a deal to buy WagerWorks, Inc.
The world's largest slot manufacture agreed to buy the online gambling software developer and provider for $90 million.
WagerWorks is a privately held company that had reportedly been eyeing a public float on the London Stock Exchange. It has had a long-standing policy of only licensing its gaming platform to operators who don't take play from U.S. customers.
WagerWorks' clients include BSkyB, Rank, Blue Square, Paddy Power, Virgin and the World Poker Tour. The company also has important premium content relationships with Sony, giving it the online rights to major brands, such as Wheel of Fortune, Hasbro and FremantleMedia.
TJ Matthews, IGT's chief executive officer, said WagerWorks' ability to be selective with its licensees made it an ideal candidate for consolidation.
"WagerWorks' adherence to a strict compliance policy ensures that operators offer the company's products and services to end users in a responsible manner," Matthews said. "We are very excited to work with their customer base, content providers and management team to accelerate and enhance WagerWorks' growth prospects."
Matthews added that the acquisition will "help the distribution of IGT game content across new channels and mediums including the Internet, mobile devices and interactive television."
Paul Miltenberger, chief executive officer for WagerWorks, said the transaction validates his company's strategy of not taking U.S. play.
"This reinforces our belief that remote gaming will continue to evolve and mature in a regulated manner, led by credible established gaming companies, like IGT," Miltenberger said. "We've had a longstanding relationship with IGT, and our approach to the industry, particularly as it relates to content, is complementary. We're thrilled about the opportunity to utilize IGT's content and intellectual property portfolio to further enhance our product offerings and deliver the most compelling gaming experience to the players."
The proposed total consideration to be paid by IGT is approximately $90 million, subject to a working capital adjustment. Pending final purchase accounting adjustments--including amortization of lifed intangibles and in-process research and development--IGT estimates the transaction to be up to $0.02 dilutive to earnings in both fiscal 2005 and 2006.
The completion of the merger is subject to customary closing conditions and regulatory approvals. IGT expects the transaction to be completed in August 2005.