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., Dec. 6 /PRNewswire-FirstCall/ -- 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/ . Contact: Robert K.
Vincent Public Affairs GTECH Corporation, +1-401-392-7452
DATASOURCE: GTECH Holdings Corporation CONTACT: Robert K. Vincent,
Public Affairs, GTECH Corporation, +1-401-392-7452 Web site:
http://www.gtech.com/ http://www.atronic.com/
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