Acquisition of International Game Technology by GTECH S.p.A. May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of International Game Technology (NYSE: IGT) by GTECH S.p.A. (MIL: GTK). On July 16, 2014, IGT announced the signing of a definitive merger agreement pursuant to which GTECH will acquire IGT. Under the terms of the agreement, IGT shareholders will receive $13.69 in cash and 0.1819 ordinary shares of stock in the combined company, for a total consideration of $18.25 per share. Following the closing of the transaction, GTECH shareholders will own approximately 80% of the combined company and IGT shareholders will own approximately 20%.
Is the Proposed Acquisition Best for IGT and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at IGT is undertaking a fair process to obtain maximum value and adequately compensate IGT shareholders.
As an initial matter, the $18.25 merger consideration represents a premium of just 17.7% based on IGT’s closing price on July 15, 2014. This premium is significantly below the average one-day premium of over 28% for comparable transactions in the past three years. Further, IGT has traded above the merger consideration of $18.25 as recently as September 19, 2013, when it reached a high of $21.20 and closed at $21.11 on the same day.
On April 22, 2014, IGT released its second quarter of 2014 earnings highlighted by its success in beating analyst estimates for comparable adjusted earnings per share, adjusted net income, and sales. For the quarter, the company reported that its social gaming revenues increased 27% to $69 million; average bookings per daily active user (“DAU”) grew 16% to $0.43; average amount of DAU was 1.8 million, an increase of 5% over the prior year quarter; and average bookings per DAU were $0.43, an increase of 16% over the same quarter last year. In announcing the quarterly results, IGT’s CEO, Patti S. Hart, stated, “During the quarter, we took decisive action to reduce IGT’s cost structure and position the company for long-term earnings growth.… Looking forward, we are confident that we will be able to leverage our leaner cost structure, substantial R&D investments and premium brands to drive shareholder value.”
In addition, upon the closing of the transaction, the initial board of directors of the combined company will consist of five directors to be appointed by IGT from IGT’s existing board of directors, including Philip G. Satre, IGT’s Chairman, and Patti S. Hart, IGT’s CEO, who will serve as Chairman of the new company and a Vice-Chairman, respectively.
In light of these facts, Robbins Arroyo LLP is examining IGT’s board of directors’ decision to merge the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
IGT shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
IGT shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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