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Notable Mergers and Acquisitions of the Day 01/31: (SGMS)/(WMS) (CXS)/(NLY) (APO) (ACIW)/(ORCC)

January 31, 2013 10:20 AM EST Send to a Friend
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* Scientific Games Corporation (Nasdaq: SGMS) and WMS Industries Inc. (NYSE: WMS) today announced that the companies have entered into a definitive agreement under which Scientific Games has agreed to acquire WMS for $26.00 in cash per common share or approximately $1.5 billion.

The transaction, which was unanimously approved by both the Scientific Games and WMS Boards of Directors, combines two leading companies in the gaming industry to create an organization that will supply an extensive range of products and services to public and private sector lottery and gaming customers throughout the world. Scientific Games is a leader in the supply of lottery instant tickets, lottery and video gaming systems and server-based gaming. WMS is a leader in the supply of gaming machines and interactive gaming content.

Scientific Games expects to achieve synergies through revenue growth, shared costs and larger scale, as well as by monetizing its significant U.S. tax attributes. The combined company will also be able to efficiently utilize shared manufacturing, engineering, software, field maintenance and customer service to drive growth and cost savings.

Excluding anticipated synergies, the combined companies generated combined revenue of approximately $1.6 billion and Combined Attributable EBITDA of approximately $579 million over the trailing 12-month period ended September 30, 2012.

Scientific Games and WMS will draw on each organization's core strengths to broaden offerings, bring gaming products to new sectors and geographies, accelerate key growth initiatives and offer enhanced capabilities, systems, field service and content. Scientific Games' strong global footprint, including its position in server-based gaming, should help accelerate WMS' international development initiatives. The addition of WMS' gaming business will also diversify Scientific Games' global business assets. Furthermore, Scientific Games and WMS are both known for their product innovation and creative content and will offer an expansive combined portfolio to customers. The combined company will be well positioned to capitalize on government sponsored gaming utilizing Scientific Games' established global platform and experience in providing lottery and gaming systems, products and services to governments.

Strengthened Position in Interactive Gaming

The combined iLottery/iGaming platform and content will significantly expand the scope of the combined company's interactive products. WMS has a well-developed iGaming platform, including social and mobile gaming, while Scientific Games has an advanced platform for iLottery, sports book and loyalty/rewards. Scientific Games expects significant opportunities to cross-sell these products to the companies' respective customers.

Scientific Games will acquire all of the outstanding shares of WMS for $26.00 per share in cash, for a total enterprise value of approximately $1.5 billion, including debt of $85 million and cash on hand of $55 million as of September 30, 2012. This consideration represents an EBITDA multiple of 6.0x WMS' Adjusted EBITDA of $246 million for the trailing 12-month period ended September 30, 2012, excluding synergies that Scientific Games expects to achieve.

The acquisition, which is subject to the approvals of WMS shareholders and gaming regulatory authorities and other customary closing conditions, is expected to be completed by the end of 2013. Scientific Games has obtained committed financing for the transaction and the transaction is not subject to a financing contingency.

BofA Merrill Lynch and Credit Suisse Securities (USA) LLC served as the financial advisors to Scientific Games and Cleary Gottlieb Steen & Hamilton LLP served as the legal advisor to Scientific Games for the transaction. BofA Merrill Lynch, Credit Suisse and UBS provided the committed financing for the transaction, with Latham & Watkins LLP serving as the legal advisor to Scientific Games for such financing.

Macquarie Capital acted as exclusive financial advisor to WMS with respect to this transaction and Skadden, Arps, Slate, Meagher & Flom LLP and Blank Rome LLP served as WMS' legal advisors.

* ACI Worldwide (Nasdaq: ACIW) and Online Resources (Nasdaq: ORCC) announced that they have entered into a definitive transaction agreement. Under the terms of the agreement, ACI Worldwide will acquire Online Resources in an all cash transaction for $3.85 per share. The boards of directors of both companies have approved the transaction.

The acquisition would also broaden ACI Worldwide’s customer base with the addition of 1,000 banks, credit unions, billers, credit card issuers, and other credit and payment service providers.

Terms:

ACI Worldwide and Online Resources have entered into a definitive transaction agreement under which ACI Worldwide would acquire Online Resources for $3.85 per share in cash in a transaction valued at an enterprise value of approximately $263 million, which includes the redemption of Online Resources’ preferred stock. ACI Worldwide will commence a cash tender offer to purchase all outstanding shares of common stock of Online Resources no later than February 15, 2013.

Upon the successful closing of the tender offer, stockholders of Online Resources will receive $3.85 per share in cash for each share of Online Resources common stock validly tendered and not validly withdrawn in the offer, without interest and less any applicable withholding taxes. ACI Worldwide will file with the U.S. Securities and Exchange Commission (SEC) a tender offer statement on Schedule TO which sets forth in detail the terms of the tender offer. Additionally, Online Resources will file with the SEC a solicitation/recommendation statement on Schedule 14D-9 that includes the recommendation of Online Resources’ board of directors that Online Resources stockholders accept the tender offer and tender their shares.

The tender offer will expire at 12:00 midnight New York City time, twenty business days after the tender is launched unless extended in accordance with the transaction agreement and the applicable rules and regulations of the SEC.

Offering materials will be available on the SEC’s website at www.sec.gov. Online Resources stockholders are urged to read the offering materials filed by ACI Worldwide, as well as materials filed by Online Resources relating to the tender offer, which contain important information about the tender offer.

Timing

The closing of the tender offer is subject to customary terms and conditions, and is anticipated to close at the end of first quarter of 2013.

Advisors

Wells Fargo Securities is serving as financial advisor to ACI Worldwide, and Jones Day is serving as its legal advisor. Raymond James & Associates Inc. is serving as financial advisor to Online Resources, SunTrust Robinson Humphrey, Inc. provided certain financial advice to the Special Committee of the Board of Directors, and Morris, Manning & Martin, LLP is serving as its legal advisor.

* Atlantic Power Corp (NYSE: AT) announced that the Company and certain of its subsidiaries have entered into a definitive agreement with Quantum Utility Generation, LLC and certain of its affiliates to sell the Company's interests in three Florida projects (the "Sale"), Auburndale Power Partners Limited Partners ("Auburndale"), Lake Cogen, Ltd. ("Lake"), and Pasco Cogen, Ltd. ("Pasco") for a purchase price, including working capital adjustments, of approximately $136 million. Atlantic Power expects to receive net cash proceeds of approximately $111 million in the aggregate, after repayment of project-level debt at Auburndale and settlement of all outstanding natural gas swap agreements at Lake and Auburndale.

The Company intends to use the net proceeds from the Sale to fully repay the Company's senior credit facility, which is expected to have an outstanding balance of approximately $67 million at close, and for general corporate purposes. The agreement contains representations, warranties and indemnification obligations that are customary in the industry. The Sale is subject to customary closing conditions and approvals, including approval from the Federal Energy Regulatory Commission, and is expected to close in the first quarter of 2013. All figures are in US$ unless stated otherwise.

* Affiliates of Apollo Global Management, LLC (NYSE: APO) announced that they have entered into a “stalking horse” asset purchase agreement to acquire certain assets of Hostess Brands, Inc.’s baked snack foods business for $410 million in cash.

Per the terms of the agreement, Apollo and Metropoulos will acquire certain Hostess Snacks brands, including, among others, Twinkies, Mini Muffins, Cup Cakes, Ho Hos, Zingers and Suzy Q’s, and five Hostess Snacks bakeries located throughout the United States. The agreement provides for the acquisition of the assets of Hostess Snacks free and clear and does not require Apollo and Metropoulos to assume any of Hostess Snacks’ liabilities or other obligations.

The asset purchase agreement constitutes a “stalking horse bid” in a sale process being conducted under Section 363 of Chapter 11 of the U.S. Bankruptcy Code. As such, the acquisition of Hostess Snacks by Apollo and Metropoulos remains subject to approval by the United States Bankruptcy Court for the Southern District of New York and a subsequent auction process in which other interested buyers may submit competing bids for the assets of Hostess Snacks. Completion of the transaction, which is expected to occur prior to the end of April 2013, remains subject to competing offers, approval by the United States Bankruptcy Court, and customary closing conditions.

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