Canadian Investment Company Brookfield to Buy Scientific Games’ Lottery Unit for $6B

Scientific Games has announced that it will sell its global lottery business to Canadian investment company Brookfield for US$6.05 billion, in a move it says will help it cut debt and pivot to a gaming and digital content provider.

The transaction is expected to close in the second quarter of 2022, subject to applicable regulatory approvals and customary closing conditions.

The Las Vegas-based slot machine maker had announced at the end of June that it would be divesting its sports betting and lottery businesses as part of a broader aim to focus on its digital operations. In late September, it sold its sports betting division, OpenBet, to Endeavor Group Holdings Inc for US$1.2 billion in cash and stock.

Bloomberg reports the lotto business had drawn interest from suitors including Apollo Global Management Inc., which acquired Great Canadian Gaming Corporation in September. Scientific Games also reportedly considered taking the unit public in Australia.

Now, it has agreed to sell SG Lottery to the flagship unit of Toronto-based Brookfield Asset Management in a deal consisting of around US$5.83 billion in cash and an additional payment of up to US$225 million based on meeting certain profitability targets in 2022 and 2023. Brookfield said the deal would be funded with about US$2.6 billion in equity, of which 30 per cent will be raised through existing funds and the rest from its institutional partners.

Scientific Games sells wholesale lottery system services in more than 50 countries, including numerous Canadian provinces, and provides a suite of turnkey solutions covering the entire lottery ecosystem, including instant and terminal-generated lottery games, sports betting, lottery systems and retail technology, and the fast-growing iLottery market.

Scientific Games estimates its lottery products and services power approximately 69 per cent of instant product retail sales globally. The company said last month that it expects SG Lottery to break US$1 billion in revenue this year.

“This transaction is transformative in accelerating the delivery of our stated strategy to optimize our portfolio, aggressively de-lever our balance sheet and position us to invest in future growth. We conducted a thorough review of paths to divest the Lottery business and we are confident that this transaction maximizes value and certainty while minimizing complexity and execution risk, and positions both Scientific Games and SG Lottery for continued success along their unique growth trajectories,” said Barry Cottle, President and Chief Executive Officer of Scientific Games.

“The significant near-term proceeds from this transaction as well as our previously announced sale of Sports Betting will transform our balance sheet and provide the financial flexibility to invest organically and inorganically to accelerate our strategies. This marks a major milestone and puts us on a clear path to achieve our vision to become the leading cross-platform global game company and unlock our full value for shareholders.”

SG Lottery will remain headquartered in metro-Atlanta with operations expected to continue around the world.

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