Shareholder Lawsuit May Derail Apollo-Everi Acquisition

Dan Clancy, a shareholder of Everi Holdings, on Wednesday, 25 September, filed a suit to block the proposed $6.3 billion deal by Apollo Global Management to acquire the company. The lawsuit accuses Everi’s board of directors of violating securities laws by submitting a misleading and incomplete proxy statement regarding the deal.

The Deal Has Significant Industry Implications

This new lawsuit follows Apollo Global Management’s July announcement that it would acquire Everi Holdings and IGT’s digital business in a multi-billion-dollar take-private deal, representing a milestone expansion for Apollo into the gaming market. All companies involved were optimistic about this strategic move, highlighting its substantial long-term benefits.

Apollo’s acquisition will also see several leadership changes. Fabio Celadon, IGT’s executive vice president of strategy and corporate development, will become the CFO of the combined company. Everi’s current CFO, Mark Labay, will take on the role of chief integration officer. Following the sale, IGT plans to rebrand and focus solely on its lottery business.

The agreement with Apollo also has broader industrywide implications, following an earlier deal between IGT and Everi. IGT had previously agreed to spin off its gaming business, with plans to combine it with Everi. However, with the acquisition by Apollo, both IGT Gaming and Everi will be combined and moved into privately owned entities, which now effectively terminates that prior agreement.

The Lawsuit Alleges Foul Play by Top Executives

According to the terms of the Apollo-Everi deal, shareholders in Everi will get $14.25 each in cash. However, the lawsuit by Clancy states this is not enough. The complaint points out that another potential buyer had presented a higher price range of $15.00 to $16.25 per share, suggesting that the current deal does not maximize shareholder value.

The proxy statement filed by Everi’s board stands at the core of the class action. According to the complaint, the document omitted material information concerning the sales process, financial projections, and the analyses done by Everi’s financial advisor. The suit goes as far as to allege the board tailored the deal to secure benefits for top executives, such as golden parachute payments and retention bonuses unavailable to regular shareholders.

It appears as though the Board has entered into the Proposed Transaction to procure significant and immediate benefits for themselves and senior management of the Company.

United States District Court: Dan Clancy vs Everi Holdings

Despite the significant steps toward finalizing the deal, Clancy’s lawsuit represents a potential roadblock. The shareholder is looking to prevent the transaction from advancing, though a shareholder vote on the acquisition has not yet been scheduled. The outcome of this lawsuit could have broad ramifications for Everi shareholders and the broader gaming sector, as the acquisition could reshape the competitive landscape of digital gaming and sports betting.