Tom Baker is not the kind of guy who would be seen doing handstands after winning the lottery or a big Pic Six carryover.
But Monday morning, when he explained the details of the acquisition by International Game Technology (IGT) of joint venture partner Anchor Gaming (SLOT), he was “excited,” to use his own characterization.
Baker, president and CEO of IGT, said that his company would be acquiring Anchor Gaming for something short of $1.4 billion in a tax-free stock swap that would have IGT offering one of its shares for each one of Anchor’s.
“We’ve been joint venture partners for the past five years,” Baker said, “and we’ve been looking at the company for a long time. I’m just so excited that it finally came together.”
Baker said that the joint partnership began with the equal sharing of revenue from Anchor’s “Wheel of Gold” that IGT was able to modify into “Wheel of Fortune.” These became, “the most successful gaming machines ever introduced to the casino industry.”
Because IGT is licensed in some 300 jurisdictions, the deal isn’t expected to be consummated until early next year. There was no concern Monday that federal authorities would get involved over the possibility that the new company would dominate the market. IGT is the largest slot manufacturer in the world and controls a bit more than 60 percent of the market in North America.
Following the exchange of shares, Anchor Gaming’s current stockholders will own approximately 20 percent of the combined IGT. The stock exchanges on Monday listed IGT at $59.10, down $0.10 for the day while Anchor was listed at $56.96, up $3.05 for the day. Without a detailed explanation, Baker said that a $75 “collar” was part of the agreement. If IGT’s stock reached a $75 per share value, “IGT could walk away from the deal.”
As for the impact the combined companies will have on IGT’s balance sheet, CFO Maureen Mullarky indicated that she anticipates a five cents to six cents increase in earnings per share during the first year and a cash flow increase of slightly more than twice that much.
In addition to the slots manufacturing facility, IGT will also be getting two small casinos in Colorado and a management contract for a Native American casino in California. Also, Anchor has two major subsidiaries, AWI lottery services and United Totalizator Co., one of the country’s largest providers of pari-mutuel wagering equipment. On Monday, a United Tote customer, Churchill Downs, announced that it had recorded the largest amount of money it has ever handled with its simulcast operations. The amount of dollars handled by United Tote equipment was $522,416,506.