IGT, Anchor Gaming announce big slot machine merger in Nevada
LAS VEGAS (AP) – International Game Technology is acquiring Anchor Gaming in a $1.1 billion stock swap creating the largest public company in Nevada.
IGT, based in Reno, is the world’s biggest slot machine manufacturer. It also is known for its Megabucks games that produce lottery-sized jackpots at casinos around the state.
Anchor is a Las Vegas-based slot machine maker with casinos in Cripple Creek and Black Hawk, Colo., and a slot machine route in Nevada. It also manages a casino opened by the Pala Band of Mission Indians in April in northern San Diego County, Calif.
”By merging, it really combines our efforts,” said G. Thomas Baker, IGT president and chief executive officer.
Baker on Monday called the merger a strategic move that will increase earnings per share and build on a five-year joint venture in slot machines. It also will strengthen company management, he said.
”No other company offers the depth of talent that IGT and Anchor Gaming will have together, from the executive level to design and manufacturing,” Anchor chairman and chief executive T.J. Matthews said in a statement.
The deal was announced late Sunday night. The companies put the value of the deal at $1.36 billion. It includes a one-to-one stock swap worth $1.1 billion with IGT assuming $430 million in Anchor debt minus the value of assets.
It needs approval from regulators and from Anchor and IGT stockholders. It is expected to be completed in the first quarter of 2002.
Baker said Monday that the companies operate in more than 300 places around the world, and need time to gain approval in each. He said because the companies have been working together, he does not foresee antitrust objections.
The merger will create a company with $2 billion in annual revenue and greater stock market value than MGM Mirage, now the largest public company in Nevada.
IGT’s market value of $4.38 billion, combined with Anchor’s market value of almost $800 million, would make the company worth more than $5 billion. MGM Mirage has a market value of $4.58 billion.
Anchor employs about 2,700 people, mostly in Las Vegas. IGT has 4,000 employees worldwide, mostly in Las Vegas. IGT spokesman Ed Rogich said layoffs are not expected.
Charles Mathewson will continue as chairman of IGT. Baker will remain chief executive officer but will relinquish the chief operating officer title to Matthews. Matthews will be one of two Anchor representatives on the IGT board. The other was not identified.
Matthews said that while IGT hasn’t operated casinos and didn’t acquire Anchor for its casino operations, the company has no plans to divest, expand or change Anchor’s casino ties.
Anchor Gaming would continue to operate separately as part of an IGT subsidiary.
The two companies have been manufacturing ”Wheel of Fortune” slot machines jointly since 1996. They also recently began producing ”I Dream of Jeannie” slot machines.
IGT may lower its offer if its stock price exceeds $75 a share around the time Anchor shareholders vote on the deal.
Anchor’s stock rose $2.18 on Monday, to $56.09. IGT stock fell 72 cents, to $58.48.
William ”Si” Redd founded IGT in 1975 as A-1 Supply. In 1978, Redd developed the first video poker machine. In 1984, Mathewson became chief executive officer. Two years later, he took over as chairman and the company expanded to international markets.
IGT took the title of world’s biggest slot machine maker in the late 1980s from Bally Manufacturing Corp.
The company reported its net income more than doubled to $53.6 million in the quarter that ended March 31.
Anchor reported a loss of $94 million, in the same period, compared with net income of $13 million in the same period last year.
The loss stemmed primarily from charges of $133 million, mostly for the write-down of the value of Powerhouse Technologies, which Anchor acquired in 1999. Revenues rose 11 percent to $123 million.
Stan Fulton, the founder and chairman of Anchor Gaming, left the company in September.
Earlier this year, IGT completed the purchase of Silicon Gaming, an ailing slot machine company.
On the Net:
Anchor Gaming: http://www.anchorgaming.com
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