GTECH Shareholders to Receive $35.00 Per Share in Cash NOVARA and
ROME, Italy, and WEST GREENWICH, R.I., Jan. 10 /PRNewswire-
FirstCall/ -- Lottomatica S.p.A. (Milan: LTO), the exclusive
license holder and operator of Italy's Lotto, one of the world's
largest lotteries; De Agostini S.p.A., a privately held Italian
diversified industrial and financial holding group that is
Lottomatica's majority shareholder; and GTECH Holdings Corporation
(NYSE:GTK), a leading provider of gaming technology and services,
today announced that Lottomatica and GTECH have entered into an
agreement pursuant to which Lottomatica will acquire GTECH for
$35.00 in cash per outstanding GTECH share. The transaction will
create one of the world's leading gaming solutions providers, with
significant global market presence and the broadest portfolio of
lottery technology, services, and content solutions. The combined
company will have operations in over 50 countries worldwide and
approximately 6,300 employees. The combined consensus estimates of
2005 revenues and EBITDA for the combined company would be 1.6
billion euros ($1.9 billion) and 0.7 billion euros ($0.84 billion),
respectively. In its fiscal year ended February 26, 2005, GTECH
reported revenues and net income of $1,257 million and $196
million, respectively. Under the terms of the agreement, which was
approved by the boards of directors of both Lottomatica and GTECH,
Lottomatica will acquire all of the outstanding shares of GTECH's
common stock. The $35.00 per share consideration represents a
premium of 15% over the closing price of GTECH shares on September
9, 2005, the last trading day before GTECH announced that its board
of directors had decided to explore strategic alternatives for the
company. GTECH currently has approximately 132.8 million shares of
common stock outstanding on a fully diluted basis, including
options and shares issuable upon conversion of convertible debt.
The total value of the transaction is approximately 4.0 billion
euros ($4.8 billion), including the assumption of GTECH's existing
net debt. The acquisition will be effected by means of a "cash
merger" of a special purpose vehicle into GTECH as a result of
which the shareholders of GTECH will be entitled to receive the
$35.00 per share in cash and the GTECH shares shall be delisted.
Lottomatica will fund the transaction through: * available cash of
0.4 billion euros ($0.48 billion); * a 1.4 billion euros ($1.7
billion) rights issue, expected to be voted upon by Lottomatica in
April 2006 and launched in May 2006; * 0.75 billion euros ($0.9
billion) of non-convertible subordinated securities expected to be
issued in May 2006; * the proceeds of a 1.9 billion euros
equivalent ($2.3 billion) senior loan, to be extended to the
special purpose vehicle to merge into GTECH at the closing of the
transaction; the loan will be guaranteed by Lottomatica. De
Agostini S.p.A. has agreed, subject to certain conditions, to
exercise its full, direct and indirect, pro-rata share of the
rights offering (0.8 billion euros) ($1.0 billion). Credit Suisse
First Boston (CSFB) and Goldman Sachs have agreed to underwrite
Lottomatica's rights issue and subordinated securities and have
committed to provide the senior loan financing. The financings and
related underwritings and commitments are subject to Lottomatica
maintaining a pro forma investment grade credit rating and other
customary conditions. Furthermore, De Agostini and Lottomatica have
agreed to enter into lock up undertakings consistent with those
provided for in similar market transactions. It is expected that
Lottomatica will maintain its investment-grade rating and that the
new capital structure will have the flexibility to pay a dividend
to shareholders and make investments in growth opportunities. The
subordinated securities, due 2066 (the statutory life of
Lottomatica will therefore be extended), will be listed on a
European stock exchange, and will be offered to institutional
investors. Completion of the transaction, which is expected to
occur in mid-2006, is subject to receipt of financing, approval by
GTECH shareholders, regulatory approvals, receipt of contract
assignment assurance from certain significant lottery customers,
Lottomatica maintaining a pro forma investment grade credit rating,
and other customary conditions. Following completion of the
transaction, GTECH will continue to operate as a separate business
unit within a newly formed Lottomatica group structure. The group
is to be headquartered in Rome and GTECH will continue to be
headquartered in Rhode Island. The transaction is not expected to
involve any substantial disruptions to the workforces of either
GTECH or Lottomatica due to minimal operational and geographic
overlap. As previously planned, Rosario Bifulco, Chairman and CEO
of Lottomatica, will relinquish his executive roles after leading
the company for four years through a period of significant
development. It is expected that at the closing of the transaction,
and subject to the required approvals of the relevant regulatory
authorities under the Italian Lotto concession: * W. Bruce Turner,
President and Chief Executive Officer of GTECH, will be proposed as
a member of the Lottomatica board of directors and will become CEO
of Lottomatica, while maintaining his position at GTECH; * Marco
Sala, current General Manager of Lottomatica, will be proposed as
Managing Director of Lottomatica with responsibility for Italian
operations. His appointment will ensure continuity in the
successful management and development of the Italian Lotto license
and Lottomatica's other activities in Italy. It is also expected
that Jaymin Patel, Chief Financial Officer of GTECH, will become
CFO of Lottomatica upon completion of the transaction. GTECH's
other current officers and management team are also expected to
remain in their positions with GTECH. It is currently anticipated
that independent directors from the United States will be named to
serve on the Board in due course. It is expected that Mr. Turner,
Mr. Patel and other members of GTECH's management team will invest
a material portion of the proceeds from the sale of their GTECH
shares to acquire Lottomatica stock from Lottomatica at the price
of the rights offering. It is expected that Lottomatica's stock
option plans will be expanded and extended to include members of
GTECH's management. Mr. Sala is also expected to have an investment
in Lottomatica. "This transaction is an extraordinary opportunity
for De Agostini," said Mr. Lorenzo Pellicioli, Chief Executive
Officer of De Agostini S.p.A. "Since investing in Lottomatica in
2002, we have looked for ways to assist the company in developing
an international footprint within the gaming industry. This merger
enhances the long-term potential of our investment by creating a
global gaming platform, with diverse revenue streams, quality
customer relationships and leading-edge technological capabilities.
As we announce this transformational transaction, I would like to
thank Rosario Bifulco, current Chairman and CEO of Lottomatica, for
his invaluable contribution to the development of the company over
the last few years, and I look forward to his continued support of
the company. We are pleased to join forces with Bruce Turner and
his team, which includes many outstanding gaming industry
executives, to build further both Lottomatica's and GTECH's gaming
platforms and competitive positions." Mr. Bifulco commented, "With
the acquisition of GTECH, Lottomatica caps a period of successful
development, transforming itself from a domestic company to a truly
international business. I believe this is a rare achievement for an
Italian enterprise. I am proud to have contributed to this process
and to Lottomatica's operations. We have indisputably strengthened
our business, and we have also laid the foundations for the further
creation of shareholder value as well as a high quality offering
for our customers." "We are proud to partner with De Agostini and
Lottomatica to create the largest global, vertically integrated
operator and solutions provider to the international lottery
market," said Mr. Turner. "During the past several years we have
firmly established GTECH as the leading global lottery provider
with strong positions in gaming solutions and commercial services,
with a commitment to integrity and customer service. At the same
time, Lottomatica has successfully grown one of the world's
largest, most profitable and most complex lotteries. The combined
company will have considerable scale and financial strength,
superior customer solutions and significant long-term growth
prospects. "My colleagues and I are pleased that the combined
company will retain our existing commitments to the Rhode Island
community and that GTECH's operations will remain intact and poised
for additional growth," Mr. Turner concluded. "The cash
consideration afforded to GTECH shareholders in the transaction
provides attractive value for the business," added Robert M. Dewey,
Jr., Chairman of the Board of Directors of GTECH. "The combined
company will benefit from the experience and expertise of GTECH
management and the dedication and commitment of GTECH employees
worldwide." Mr. Sala said, "The acquisition of GTECH further
enhances our expertise, capabilities and technologies, which will
benefit our operations in Italy and in other markets around the
world. Our Italian team looks forward to sharing ideas and
strategies with our new colleagues, as we work together to
strengthen the new Lottomatica's global leadership position."
GTECH's Board of Directors has received separate opinions from
Citigroup Global Markets and Houlihan Lokey Howard & Zukin that
the transaction is fair to GTECH stockholders from a financial
point of view. GTECH's financial advisor is Citigroup Global
Markets, and its legal counsel is Cravath Swaine & Moore LLP
and Edwards Angell Palmer and Dodge LLP. Lottomatica's financial
advisor with respect to this transaction (with regard to rating
advisory and hybrid structuring) is Credit Suisse First Boston
(Europe) Limited ("CSFB"), and its legal counsel are Dewey
Ballantine LLP and Bonelli Erede Pappalardo. Shearman &
Sterling LLP and Gianni, Origoni, Grippo & Partners are the
legal counsel for CSFB and Goldman Sachs in the transaction
(including with regards to financing). The Lottomatica Board has
received from CSFB and Goldman Sachs opinions with respect to the
fairness to the company from a financial point of view of the
consideration to be paid pursuant to the terms of the transaction.
Revenues and EBITDA for Lottomatica and GTECH have been presented
on a combined basis in this document for illustrative purposes only
and do not indicate the actual combined revenues and EBITDA of the
companies for the periods presented after giving effect to the
transaction. The combined numbers have been calculated solely as
the pure arithmetic sum of the I/B/E/S December 2005 estimates for
the standalone revenues and EBITDA of Lottomatica and GTECH. In
addition, for GTECH, the December 2005 estimates are obtained by
calendarising I/B/E/S estimates for February 2005 (2/12) and
February 2006 (10/12). The combined numbers are presented solely to
illustrate generally the overall scope of the combined company, and
should not be taken to represent how the companies would have
performed on a historical basis had their operations been combined
during the periods presented, or how the companies will perform on
a combined basis after giving effect to the transactions. Moreover,
the combined numbers do not reflect any pro forma or other
adjustments to reflect the combination or any adjustments to
conform the accounting principles of the two companies. Lottomatica
reports its financial information in accordance with IFRS, and
GTECH reports its financial information in accordance with United
States generally accepted accounting principles. EBITDA, as used in
this document, means earnings before interest, taxes, depreciation
and amortization. For the foregoing reasons, such numbers are not
comparably determined and are presented herein only for
illustrative purposes. About Lottomatica Lottomatica S.p.A.
operates one of the largest lotteries in the world, the Italian
"Lotto," and is the market leader in the Italian gaming industry.
Lottomatica has a network of 44,000 lottery terminals and offers
services through its three main business segments -- lotteries,
sports games and betting, and commercial services. The company,
headquartered in Rome, has revenues of 585.8 million euros (1),
over 1,000 employees and is publicly- traded on the Milan stock
market (LTO). It is controlled by De Agostini, which owns 58% of
the company's share capital. For more information about the
company, please visit Lottomatica's website at
http://www.lottomatica.it/. About De Agostini Privately owned De
Agostini is a leading Italian diversified industrial and financial
holding group, with significant international operations. In
addition to the investment in Lottomatica, it is mainly active in
the insurance sector (through 65.5% owned Toro Assicurazioni, a
leading Italian insurer, with 2004 revenues of 2,654 million
euros), in free-to-air TV (19.7% of Antena 3, a leading Spanish
broadcaster, with 2004 revenues of 817 million euros) and in
publishing (100% of De Agostini Editore with 2004 revenues of 1,705
million euros and operations in about 30 countries worldwide). For
more information about De Agostini, please visit
http://www.gruppodeagostini.it/. About GTECH GTECH is a leading
gaming technology and services company. With more than $1.25
billion in annual revenues and 5,300 people in over 50 countries,
GTECH provides integrated technology, creative content, and
business services to effectively manage and grow today's evolving
gaming markets. In targeted emerging economies, GTECH also
leverages its operational presence and infrastructure to supply
commercial transaction processing services. For more information
about the company, please visit GTECH's website at
http://www.gtech.com/. ADDITIONAL INFORMATION GTECH will file a
Form 8-K with the Securities and Exchange Commission (the "SEC")
regarding the transaction, which will include a copy of the
definitive agreement. All parties desiring details regarding the
conditions of this transaction are urged to review the contents of
the definitive agreement, which is available at the SEC's website
at http://www.sec.gov/. In connection with the proposed merger,
GTECH will file a proxy statement and other documents with the SEC.
We urge shareholders to carefully read the proxy statement and any
other documents filed with the SEC when they become available
because they contain important information about GTECH, the
proposed merger and related matters. A copy of the proxy statement
will be sent to shareholders seeking their approval of the proposed
merger. Shareholders also will be able to obtain a copy of the
proxy statement (when available) and other documents filed by GTECH
free of charge at the SEC's web site, http://www.sec.gov/, or at
the SEC's public reference room at 100 F Street, NE, Room 1580,
Washington, D.C. 20549. In addition, documents filed by GTECH can
be obtained by contacting GTECH at the following address and
telephone number: GTECH Corporation, 55 Technology Way, West
Greenwich, Rhode Island 02817, Attention: Investor Relations
Director, Telephone: 401-392-1000, or from GTECH's website,
http://www.gtech.com/. GTECH and its officers, directors and
certain other employees may be soliciting proxies from GTECH
shareholders in favor of the proposed merger and may be deemed to
be "participants in the solicitation" under the rules of the SEC.
Information regarding GTECH's directors and executive officers is
available in its proxy statement filed with the SEC on June 24,
2005. Other information regarding the direct or indirect interests,
by security holdings or otherwise, of the participants in the
solicitation will be set forth in the proxy statement relating to
the merger when it becomes available. Statements about the expected
timing, completion, and effects of the proposed transaction and all
other statements in this release, other than historical facts,
constitute forward-looking statements within the meaning of the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Readers are cautioned not to place undue reliance on
these forward- looking statements and any such forward-looking
statements are qualified in their entirety by reference to the
following cautionary statements. All forward-looking statements
speak only as of the date hereof and are based on current
expectations and involve a number of assumptions, risks, and
uncertainties that could cause the actual results to differ
materially from such forward-looking statements. GTECH and
Lottomatica may not be able to complete the proposed transaction on
the terms described above, on other acceptable terms, or at all
because of a number of factors, including the failure to obtain
shareholder approval, the failure of Lottomatica to obtain
financing, the failure to receive required assurances from certain
significant lottery customers, Lottomatica maintaining a pro forma
investment grade credit rating, or the failure to satisfy the other
closing conditions. These factors, and other factors that may
affect the business or financial results of GTECH, are described in
GTECH's filings with the SEC, including Items 1 and 7 of GTECH's
annual report on Form 10-K for the fiscal year ended February 26,
2005. This press release shall not constitute an offer to sell or a
solicitation of an offer to buy any securities, nor shall there be
any sale of securities, in any state or jurisdiction in which such
offer would be unlawful. No securities referred to herein will
registered under the U.S. Securities Act of 1933, as amended, and
therefore no such securities may be offered or sold in the United
States without registration or an applicable exemption from the
registration requirements of the Securities Act. No securities
referred to herein will be publicly offered in the United States.
This press release is not a solicitation of a proxy from any
security holder of GTECH. (1) Year end 2004 restated accordingly
with IAS/IFRS principles Contact: GTECH Robert K. Vincent Public
Affairs 1-401-392-7452 Lottomatica (U.S.) Mark Semer or Jeremy
Fielding Kekst and Company 1-212-521-4800 Lottomatica (Italy) Mario
Pellegatta, Marco Fraquelli Sara Balzarotti Matteo Cidda Ad Hoc
Communications 39-027-606-741 DATASOURCE: GTECH Holdings
Corporation CONTACT: Robert K. Vincent, Public Affairs at GTECH,
+1-401-392-7452; Mark Semer or Jeremy Fielding of Kekst and Company
for Lottomatica (U.S.), +1- 212-521-4800; or Mario Pellegatta,
Marco Fraquelli, Sara Balzarotti or Matteo Cidda of Ad Hoc
Communications for Lottomatica (Italy), +39-027-606-741 Web site:
http://www.gtech.com/ http://www.gruppodeagostini.it/
http://www.lottomatica.it/
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