Bid for GTECH sends price of shares soaring

Sep 13, 2005 4:43 AM

Cost of shares in GTECH Holdings Corporation (GTK), the world’s leading provider of lottery materials, skyrocketed unexpectedly on Monday following the announcement by the company that it had received an expression of interest from an unidentified third party looking to acquire the company.

The company said the expressed interest was both unsolicited and non-binding and that the independent members of the board of directors were examining its strategic options.

GTECH said it had hired Citigroup Global Markets as their financial advisor.

In a press release, the company said, "The company’s board has not concluded that the company should enter into any extraordinary transaction and, in any event, there can be no assurance that, if the directors determine that a sale of the company at this time is an attractive option, a transaction will be successfully negotiated or consummated, or as to the form or terms of such a transaction.

"The company does not intend to make any further statement regarding these matters until it either reaches a definitive agreement regarding a transaction or determines not to pursue any such transaction."

That was all Wall Street needed to begin active trading in the company’s stock.

In pre-opening trading Monday, the price of the shares moved up from Friday’s close of $30.43 per share to $32.60. Within the first two hours of trading, the price had moved up to $33.91 per share, an increase of $3.48 for the day.

At closing, after nearly nine million shares had changed hands, the share price was $34.81, a 14.39% or $4.38 increase.

Sales delayed

Katrina’s impact will delay the pending sale of some 600 slot machines that International Game Technology (IGT) had planned to deliver before Sept. 30. Also, the company said sale of an additional 1,000 to 2,000 units to Gulf Coast casinos will be put on hold pending the reopening of the casinos.

Estimated book value of the machines and assets affected by the storm was estimated at $10 million.

As for company owned devices, IGT said they lost about 900 of the 2,300 machines in operation in the affected area. They added that another 700 machines were idle because two monitoring sites in New Orleans and Gulfport, Miss., were inoperable. Alternative sites were being sought.

Accounting woes

After two earlier postponements, Alliance Gaming Inc. (AGI) failed again last week to release its 2005 fiscal year results, causing some investors to lose faith in the company.

According to the explanation given by the company, auditors were reviewing the proper accounting for the termination of a contract whereby the company took back 600 machines it had placed with a firm in Oklahoma. The contract termination took place last December, thus possibly affecting the financial reports of both 2004 and 2005.

Richard Haddrill, company CEO, told listeners to a conference call that the company would seek a 15-day extension for the document filing with the Securities and Exchange Commission.

Meanwhile, on Friday, investors traded more than 1.5 million shares of AGI stock and left the per share price at $10.63, down $0.27 for the day.

And, on Monday, Moody’s Investors Service lowered its ratings of Alliance Gaming debt and placed the ratings on review for possible further downgrade.

THE INSIDER: Mikohn Gaming Corporation, doing business as Progressive Gaming International Corporation (PGIC) announced it has agreed to acquire EndX Group Ltd. of England for $27 million.

Nevada casinos set another record in gaming revenue for the month of July, according to a report from the Gaming Control Board. Total win for July was $958.4 million, a 17.9% increase over July 2004.

Atlantic City casinos in August won $473 million or 4.6% more than it did in August 2004.

San Remo Hotel/Casino, located just across Tropicana Blvd. From MGM Grand Hotel/Casino, has added a 24-hour bar and sports book called Pete and Shorty’s Book and Bar. The property will be transformed next year into a Hooters Casino Hotel.

Scientific Games Corporation (SGMS) has received a contract for lottery ticket services from the Washington D.C. Lottery. Also the company has signed a five-year deal for its Autotote division to supply race-wagering services at casinos operated by the Ho-Chunk Nation in Wisconsin.

Boyd Gaming Corp. (BYD) has purchased the land beneath the Barbary Coast Hotel/Casino at the corner of Flamingo Boulevard and the Las Vegas Strip for $15.7 million.

Pinnacle Entertainment Inc. (PNK) has begun construction of a $400 million gambling complex in downtown St. Louis, Mo. The 90,000 square foot casino is located just north of the famed Gateway Arch in St. Louis.

The Gaming Standards Association (GSA) has welcomed International Game Technology (IGT) as a platinum member.

Bally Gaming and Systems, a division of Alliance Gaming Corp. (AGI) says it has an agreement to provide 302 slot machines to Remington Park in Oklahoma. The racino, owned by Magna Entertainment Corp. (MECA) will open in November with 650 gaming devices.

Also, Bally said it has been contracted to provide 2,450 machines and a bonusing solution system for the South Coast Hotel and Casino that is under construction on Las Vegas Boulevard South by Boyd Gaming Corp. (BYD).

The Pennsylvania Gaming Control Board announced it has decided to accept "conditional" slot machine license applications from the operators of the state’s six horse tracks.

WPT Enterprises, Inc. (WPTE) has expanded its global involvement in the World Poker Tour by signing licensing agreements to stage regional versions in Canada and the Philippines.

Penn National Gaming Inc. (PENN) has received hundreds of applications for jobs at its planned temporary slot operation in Bangor, Maine. The applications were located in such distance places as Millinocket in the north and Waterville in the south.