Apollo Global Completes Acquisition of IGT’s Gaming Assets in Italy

Apollo Global Management continues to take bigger chunks of the global gaming market. It has shown interest in a number of gaming companies around the world as the industry continues to grow. As of this past Monday, Apollo is the owner of assets in Italy that previously belonged to International Game Technology (IGT), officially taking possession of the latter’s lottery operations in the country in a deal valued at $1.15 billion.

Apollo Becomes an Italian Lottery Operator

IGT and Apollo announced a potential arrangement last December that would see Apollo purchase IGT’s B2C Lottomatica operations in Italy. The lottery operator was to be sold to Apollo’s Gamenet Group subsidiary, giving the company access to a large market of gaming machine, sports gambling and online and retail gaming activity. That deal has now been completed, with IGT handing over the keys to Apollo this week in exchange for a down payment of $879.42 million. Another payment of $121.3 million will be due by the end of this year, with the balance to be paid by September of next year. In October of last year, Lottomatica showed gross proceeds of $24.5 million and, at that pace, Apollo should be able to pay off the balance with revenue generated by sales.

The money couldn’t have come at a better time for IGT. The company’s global operations were impacted by the COVID-19 pandemic and its revenue was 23% lower than it was a year earlier. IGT was holding $7 billion in debt at the end of last year, and the sale of the Lottomatica assets will help the company “pay transaction expenses and reduce debt.” IGT has been able to reduce operating expenses as it works to overcome the losses and will continue to find new ways to reduce its financial burdens.

IGT on the Rebound in 2021

IGT released its earnings report for the first quarter of the year yesterday and asserted that the quarterly results were “among the highest revenue and profit levels” in its history. It reported consolidated revenue of $1.015 billion, a year-on-year increase of 25%, with Global Lottery operations jumping 48% to $749 million. IGT made it back to the right side of the chart with its operating income, reporting a positive of $260 million as opposed to the $218-million loss it reported in the first quarter of last year. The performance was enough to allow IGT to report net income per diluted share of $0.38 after having presented a net loss of $1.28 a year earlier.

The rebound will continue, according to company executives, throughout all of 2021. Max Chiara, IGT’s CFO, asserts, “With the recovery in our business in full swing, we are delivering strong operating leverage which, when coupled with invested capital discipline, drove strong cash flows in the quarter. This enabled us to accelerate our debt retirement strategy and gives us confidence in a return to pre-pandemic leverage levels by the end of the current year.”