The group currently holds 83% of the economic interest in the social gaming business, with the proposed purchase to be priced at $20 per share. L&W also has 98% of the voting interest in SciPlay.
The consideration would imply an enterprise value of $2.1bn for SciPlay and a premium of 28.5% based on SciPlay’s closing stock price as of the close of business on 17 May, the last trading day before the proposal.
Should the acquisition go through as expected, SciPlay would become a wholly owned subsidiary of L&W.
According to L&W, the deal would unify its businesses and enable seamless collaboration to support the group’s cross-platform strategy. L&W added that a combined balance sheet with SciPlay would provide flexibility to invest cash across the group to drive shareholder value.
Value for SciPlay shareholders
“The proposed transaction offers SciPlay’s public shareholders a compelling combination of value, speed and certainty, L&W president and chief executive Matthew Wilson said in a letter to the group’s board.
“SciPlay’s public shareholders would receive an immediate and certain premium value for their shares in cash, obtaining liquidity and de-risking their investment in a volatile and uncertain market.”
Wilson added that L&W will not conduct due diligence and does not expect the transaction to require regulatory approvals or the approval of L&W shareholders. Further, he said, L&W will not require any third-party financing to fully fund the deal.
“Through our existing collaboration with SciPlay, we believe the transaction would be operationally seamless and we look forward to fully joining forces with SciPlay’s talented leadership team and employees to continue innovating on behalf of customers and players,” he said.
SciPlay growth in Q1
Last week, L&W posted a 17.1% year-on-year increase in revenue for the first quarter of 2023, helped by record performances by its igaming and SciPlay.
L&W experienced double-digit growth across all its business segments during the quarter, with its gaming division remaining by far its primary source of revenue.
Revenue in the first quarter amounted to $670m, up from $572m in the corresponding period last year. Gaming revenue hit $419m, SciPlay $186m and igaming $65m.
L&W ASX listing
The announcement comes after L&W this week also secured conditional approval for a secondary listing on the Australian Securities Exchange (ASX). L&W will be permitted to the official list of the ASX as an ASX Foreign Exempt Listing.
Official quotation of L&W Chess Depositary Interests (CDIs) is due to commence on 22 May, with each CDI to represent one fully paid share of common stock.