GTECH Enters Into Partnership Agreement to Acquire 50 Percent
Controlling Equity Stake of Atronic from Gauselmann Group Alliance
Will Create a Worldwide Leader in the Machine Gaming Market WEST
GREENWICH, R.I., and SCOTTSDALE, Ariz., Dec. 6 /PRNewswire/ --
GTECH Holdings Corporation (NYSE:GTK) and the owners of
privately-held Gauselmann Group today announced that both parties
have entered into an agreement whereby GTECH will acquire a 50
percent controlling equity position in the Atronic group of
companies owned by Gauselmann. The remaining 50 percent of Atronic
will be retained by the owners of the Gauselmann Group. The final
purchase price will be calculated through a performance-based
formula equal to eight times Atronic's EBITDA (earnings before
interest, tax, depreciation, and amortization) for its fiscal year
2006 ending December 31, 2006. In addition, in the 12 months after
the closing, Atronic will also have the potential to receive an
earn-out based on its 2007 performance above specified thresholds.
Based on Atronic's medium-term outlook, GTECH expects the all-cash
transaction will have a total value of approximately $100 million
to $150 million, for its 50 percent share including the assumption
of debt. "The alliance of GTECH and the Gauselmann Group represents
the coming together of two industry leaders that share a common
vision of the future of machine gaming. GTECH and Gauselmann are
creating in Atronic a new strong global competitor in gaming
content, equipment, systems and services, and a market innovator
with strong positions in the highest growth gaming markets," said
Gauselmann's Co-Chairman and CEO Michael Gauselmann and GTECH
President and CEO W. Bruce Turner jointly. "This transaction is a
central part of the growth strategy for both companies. It is a
fair value for both in that it is structured as a market driven
multiple of performance," said Messrs. Gauselmann and Turner.
"Today's announcement is a significant step in our continuous
efforts to grow our casino market leadership with a very strong
global U.S.-based partner," said Mr. Gauselmann. "The Gauselmann
Group is the largest manufacturer/operator of coin-operated gaming
machines in Europe. Atronic is the leading video slot provider in
Europe, Russia, and Latin America, and is licensed in 196 worldwide
gaming jurisdictions with a solid and growing presence in the
United States. We offer products and services in 83 countries and
20 U.S. states, including 138 Native American tribes, and have
become known for our highly competitive games, products, and
services. This new alliance with GTECH will provide us with the
additional capital and resources essential for our U.S. growth and
overall increasing competitiveness in the global slot industry."
"The alliance with Gauselmann is the next logical step for GTECH to
achieve its long-term strategic objectives within the gaming
markets we have targeted," said Mr. Turner. "As the
government-sponsored and commercial gaming markets converge, video
gaming has become an expanding component of our growth strategy.
Our interest in Atronic dramatically broadens our
government-sponsored game and systems offerings, bringing a new
library of games, as well as commercial casinos and central
monitoring system applications and services." The transaction,
which is contingent upon regulatory and gaming license approvals,
and other closing conditions, is expected to be completed on
December 31, 2006. However, starting immediately and during the
next 24 months, Atronic and GTECH will pursue mutually beneficial
global projects. As part of the transaction, beginning in 2012,
GTECH has the option to purchase Gauselmann Group's interest in
Atronic and Gauselmann has a reciprocal right to sell its interest
to GTECH. There are also mutual put/call rights that may become
effective before 2012, under certain circumstances. "Atronic has a
strong management team with a tremendous amount of experience in
global sales and distribution, as well as platform and content
development. Their current system portfolio provides a number of
system modules that will enhance our current video central system,
including player tracking, bonusing, and cashless wagering, thus
enabling us to sustain market leadership," continued Mr. Turner.
"Atronic also has wide-area progressive games that are currently
operational in a number of U.S. jurisdictions." Atronic's recently
launched e-motion(TM) video gaming platform is widely hailed as the
industry's most ergonomically advanced video gaming machine. With
its unique cabinet design, e-motion creates an exclusive player
environment, with brilliant 3-D graphics, state-of-the-art
technology, and advanced player interactive game concepts. "With
our recent investment in a new R&D facility in Arizona as part
of our global R&D strategy implementation, Atronic expects to
create a growing number of new games each year starting with 40 in
2005," continued Mr. Gauselmann. "Today, Atronic's library consists
of more than 80 active video game titles with various cabinet
styles, and numerous additional games and products are slated for
market introduction to address each single global casino-style
product segment." "As the lottery industry evolves from system
centric to more content centric, building a large and strong
library of games will be essential to our long-term success," said
Mr. Turner. The Atronic transaction will also strengthen GTECH's
Spielo subsidiary. The two companies are complementary and will
ultimately enable each organization to leverage the other's
strengths. Both companies have agreed to cross-license and
distribute each other's content starting immediately. When
appropriate, Spielo and Atronic will share infrastructure and work
together on developing a common systems platform to serve all GTECH
and Atronic markets. Founded in 1993, Atronic currently employs
more than 800 people in its offices in Germany, Austria, Australia,
Africa, United Kingdom, Peru, Nevada (Las Vegas and Reno), Arizona,
Mississippi, and Peru. Atronic's revenues for its current fiscal
year ending December 31, 2004 are expected to be approximately $200
million, about 25 to 30 percent of which will come from its North
American customers. Under this agreement, Atronic will continue to
maintain its current operations and its established worldwide brand
identity. A cooperation and integration plan is already under
development in order to assure customers of uninterrupted services
and a seamless transition. When appropriate, Atronic will begin
collaborating with GTECH in order to maximize opportunities for
both companies prior to the December 31, 2006 closing. In the first
full fiscal year, 2008, which ends in February 2008, GTECH expects
Atronic's revenues to be in the range of $250 million to $300
million, and be earnings-per-share neutral to slightly positive.
For additional background information regarding Gauselmann Group,
Atronic, and the transaction, please visit http://www.gtech.com/
and click on "Update on Atronic." Conference Call Information GTECH
will host a conference call for analysts and investors today,
December 6, 2004, at 8:30 a.m. (Eastern Standard Time). The call
may be accessed in two ways. It will be broadcast live over the
Internet. Go to GTECH's website at http://www.gtech.com/ , click on
"Investors," then select "Live Broadcast." Or, if you do not have
Internet access, you may listen to this call by dialing (612)
332-0226. If you are unable to listen to this call live, it will be
available on GTECH's website under "Conference Calls &
Calendar" in the "Investors" section. Replay of the call will also
be available by dialing (320) 365-3844, access code: 758685,
beginning Monday, December 6, 2004 at noon, through midnight,
Tuesday, December 7, 2004 (Eastern Standard Time). Certain
statements contained in this press release are forward looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
This press release identifies forward looking statements by words
such as "may," "will," "should," "could," "expect," "plan,"
"anticipate," "intend," "believe," "estimate," "continue," or
similar words that refer to the future. Such statements include,
without limitation, statements relating to the consummation of the
acquisition by GTECH Holdings Corporation ("GTECH") of a 50 percent
controlling interest in the Atronic group of companies owned by the
Gauselmann Group ("Atronic"), and the prospects and financial
outlook for GTECH and Atronic, both before and after the closing of
this transaction, which statements reflect management assumptions:
(i) that all regulatory and gaming license approvals necessary to
consummate this transaction will be obtained, and that the other
conditions to closing will be satisfied, (ii) regarding the future
prospects for and stability of the gaming industry, (iii) regarding
the future operating and financial performance of GTECH and Atronic
both before and after the closing of this contemplated transaction
(including, without limitation, as to future revenues, profit
margins and earnings per share), and (iv) regarding the ability of
the GTECH and Atronic to retain existing gaming business, to obtain
and retain new gaming business, and to otherwise realize
anticipated synergies from this transaction. Such forward looking
statements reflect management's assessment based on information
currently available, but are not guarantees and are subject to
risks and uncertainties that could cause actual results to differ
materially from those contemplated in the forward looking
statements. These risks and uncertainties include, but are not
limited to, those set forth above, in GTECH's subsequent press
releases, and on reports by GTECH on Forms 10-K, 10-Q and 8-K, and
other reports and filings with the Securities and Exchange
Commission, as well as risks and uncertainties respecting: (i) the
potential impact of extensive and evolving government regulations
upon the gaming business, in general, and upon this transaction in
particular; (ii) the ability of GTECH and Atronic to work together
to retain and extend existing gaming business; (iii) the
possibility of slower than expected growth or declines in sales of
gaming goods and services by GTECH and Atronic; (iv) exposure to
foreign currency fluctuations; (v) risks and uncertainties inherent
in doing business in foreign jurisdictions; (vi) the possibility of
significant fluctuation of quarterly operating results; (viii) the
intensity of competition in the gaming industry; (ix) the
possibility of substantial penalties under and/or termination of
GTECH's and Atronic's contracts; (x) the ability of GTECH and
Atronic to respond to technological change and to satisfy the
future technological demands of their customers; (xi) opposition to
expansion of gaming; (xii) GTECH's and Atronic's ability to attract
and retain key employees; and (xiii) the possibility of adverse
determinations in pending legal proceedings. About GTECH: GTECH, a
leading global information technology company with over $1 billion
in revenues and more than 5,400 people in over 50 countries,
provides software, networks, and professional services that power
high-performance, transaction processing solutions. The Company's
core market is the lottery industry, with a growing presence in
commercial gaming technology and financial services transaction
processing. For more information about the Company, please visit
GTECH's website at http://www.gtech.com/ . About
Gauselmann/Atronic: The family-owned and operated Gauselmann Group
is the second largest manufacturer of gaming devices worldwide,
having sold more than 1.9 million machines since inception,
generating some EURO 669 million during fiscal 2003. The Atronic
Group, namely Atronic Americas, Atronic International, Atronic
Australia and Atronic Systems, are members of the Gauselmann Group
casino- segment. Atronic is headquartered in Germany, and has
offices in Australia, Austria, Great Britain, Peru, South Africa,
and the United States of America. Atronic is dedicated to producing
only the highest quality of entertaining games and products,
including dynamic casino management and linked gaming solutions
which are being operated in 83 countries worldwide. Atronic holds a
total of 196 worldwide gaming licenses including the United States
of America, where it is licensed to sell machines in 20 states and
to 138 tribes. To find out more information about Atronic, please
visit the website at http://www.atronic.com/ . NOTE TO EDITORS:
Photo available upon request. DATASOURCE: Atronic America CONTACT:
Katie Stage of Atronic America, +1-480-609-5867, ; or Robert K.
Vincent of GTECH, +1-401-392-7452 Web site: http://www.gtech.com/
http://www.atronic.com/
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