Posted on: February 28, 2022, 07:32h.
Last updated on: February 28, 2022, 10:22h.
International Game Technology (NYSE:IGT) announced today its IGT Lottery S.p.A. is selling its Italian proximity payment business to PostePay S.p.A. — Patrimonio Destinato IMEL — for $788.31 million.
IGT’s board of directors approved the transaction, which is slated to close in the third quarter. The buyer wasn’t identified by the gaming company. The sale price represents an enterprise value of $709.48 million and unrestricted cash of $78.83 million, based on current exchange rates.
This transaction provides us with an opportunity to monetize IGT’s market leadership in the Italian proximity payment business at an attractive value as we continue to execute our long-term strategy,” said IGT CEO Vince Sadusky in a statement.
Under the terms of the agreement, IGT is divesting LIS Holding S.p.A., and indirectly, LISPAY S.p.A. Those units operate the seller’s proximity payment business in Italy.
“Services offered range from payments services including bill payments and prepaid payment cards to commercial services providing telco and e-vouchers top up and technological solutions including merchant and enterprise services,” according to IGT.
IGT Wringing Value from Italy Assets
Selling PostePay marks the second time IGT monetized an asset in Italy — the Eurozone’s third-largest economy.
In December 2020, the gaming company sold its Italian digital gaming, gaming machine, and sports wagering operations to Gamenet Group S.p.A for $1.15 billion. Gamenet is a group of affiliated funds run by private equity giant Apollo Global Management.
The proximity payments unit generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $45 million on sales of $256.76 million last year. That indicates the valuation on the sale is in line “with the most recent Italian transactions in the proximity payments sector.”
The UK-based gaming technology company provides back-end services and solutions for lotteries and sportsbooks around the world, and also manufacturers slot machines.
IGT Debt Reduction Effort Continues
Proceeds from the PostePay transaction will be used to reduce debt, something IGT is diligently working on. The company is in the midst of a cost-cutting program aimed at delivering $150 million more in annual savings compared to pre-coronavirus pandemic levels.
IGT is forecasting 2022 revenue of $4.1 billion to $4.3 billion, and last November, it restored its dividend, while revealing the first share buyback plan in its history. That indicates its balance sheet is strong and debt reduction efforts are bearing fruit.
Last September, the gaming company announced the creation of a dedicated digital and sports betting unit, which analysts are speculating could eventually be spun off from the parent company in an effort to unlock value for investors and further reduce debt.
IGT previously said that in 2025, it expects to generate free cash flow of $2.5 billion on cash from operations of approximately $4 billion.