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Light & Wonder agrees to slash OpenBet sale price by $400m

| By Richard Mulligan
Light & Wonder (L&W) has agreed to cut the sale price of its OpenBet business by a third to $800m to ensure the deal completes.

The Las Vegas-headquartered group, formerly Scientific Games, has agreed to an amended purchase agreement with IMG Arena-owner Endeavor that will see it receive $750m in cash and $50m in Class A common stock for the sports betting technology business.

The conditions for closing have been modified, with Endeavor agreeing to waive the closing condition requiring regulatory approval by the Nevada Gaming Control Board, if required.

It is hoped the deal can now complete by the end of September 2022, with the initial target of Q2 2022 having already been missed.

The amended agreement is significantly less than the $1.20bn that was agreed in September 2021, which was to be funded by $1.0bn in cash and $200m in Class A common stock.

However, L&W said in a statement that the amended purchase agreement provides a “strong valuation” in the current market and also “increases the speed and certainty of closing” by modifying the conditions for closing.

It added that the recently completed $5.8bn sale of its lottery business and the pending sale of OpenBet will cumulatively generate approximately $5.6bn of estimated net after-tax proceeds as L&W pursues its strategy of streamlining its business.

“Endeavor is the right partner for OpenBet and the amended agreement increases speed and certainty by creating a simplified path to closing the transaction, while unlocking substantial benefits for OpenBet and Light & Wonder,” said Barry Cottle, L&W’s president and chief executive.

“OpenBet demonstrates continued momentum across their key markets and the amended terms of the transaction provide strong value for the business. The significant cash consideration from the OpenBet sale will enable us to further de-lever our balance sheet and achieve our Targeted Net Debt Leverage Ratio range of 2.5x to 3.5x.

“This transaction is the final step in our journey to streamline our organisation as we deliver on our promises as the leading cross-platform global game company. Our enhanced financial flexibility will enable us to accelerate the return of significant capital to shareholders through our share repurchase programme, while also investing in key growth initiatives.”

OpenBet has more than 75 global customers across markets such as the US, UK, Australia and Canada, and works with 46 sports books across 12 US states.

OpenBet, meanwhile, was acquired by NYX Gaming Group in 2016 for £270.0m, with NYX then acquired by Scientific Games in a CA$775m (€519.6m/US$626.5m) deal in 2018.

It has been used as part of the solutions giant’s entry into the US sports betting market, until Scientific Games announced in June that it was to divest the unit, alongside its lottery arm, in order to reduce its debt and refocus the business on gaming.

Speaking last year, Endeavor said the purchase would complement its position within the sports betting market, created through data specialist IMG Arena.

The combination of OpenBet and IMG Arena, Endeavor said, would create a unique end-to-end solution, delivering official data and video streams, content, mobile products and betting technology solutions to leagues, federations and sportsbooks around the world.

“OpenBet marks a strategic addition to our sports betting portfolio as we look to round out our technology and product offering for sportsbook operators and sports brands worldwide,” Endeavor chief executive Ariel Emanuel said. 

“The combination of OpenBet and our IMG Arena business will enable us to expand our footprint across the entire sports betting value chain and further capitalise on the tremendous upside we see coming from this fast-growing global industry.”

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