DEQ's Table Product Portfolio Complements Scientific Games'
Leading Table Solutions to Offer More Robust Portfolio for Casino
Pit
- Acquisition strengthens Scientific Games' table products
offering, adding to the Company's "one-stop-shop" for casino
operators
- Adds more proprietary table games and table progressive systems
to Scientific Games' rich table solutions library
- DEQ's intellectual property licensing drives high margin
long-term recurring revenue
- Transaction expected to be accretive to earnings and operating
cash flow to Scientific Games in 2017
LAS VEGAS and LEVIS, Quebec, Aug. 31,
2016 /CNW/ -- Scientific Games Corporation (NASDAQ:
SGMS) ("Scientific Games" or the "Company") and DEQ Systems
Corp.(TSXV: DEQ) ("DEQ"), today announced that they have entered
into a definitive agreement (the "Agreement") under which
Scientific Games will acquire all of DEQ's issued and outstanding
common shares for a cash payment of CAD$0.38 per share.
The transaction is expected to close in the fourth quarter of
2016 or the first quarter of 2017, subject to approval by DEQ's
shareholders, receipt of gaming approvals in certain jurisdictions,
and other customary closing conditions. DEQ generated revenue of
CAD$9.5 million with gross profit of
CAD$8.1 million on a trailing
12-month basis for the period ended May 31,
2016.
Scientific Games Senior Vice President – Table & Utility
Products Roger Snow said, "The DEQ team has grown a fantastic
business focused on providing revenue-generating and entertaining
solutions for casino operators around the world. Their established
and high-performing library of table games, table progressives, and
random bonusing systems will enhance our offerings, add to our
recurring revenue base, and provide even more ways for casinos to
engage players through Scientific Games' extensive end-to-end
casino portfolio of gaming machines, casino systems, table
products, and interactive solutions. We're especially excited about
DEQ's EZ Baccarat®, the world's leading baccarat brand
with nearly 800 table games in 150 casinos worldwide."
Scientific Games, already a leader through its successful and
proven Shuffle Master brand, now adds depth and breadth to
its portfolio with the acquisition of DEQ Systems' table games and
table game progressives, including its suite of table progressives
which provide a recurring revenue stream.
DEQ Systems President and Chief Executive Officer Joseph Bertolone said, "We believe that this is
a very good transaction for our company. We look forward to working
closely with the Scientific Games team to ensure a smooth
transition and continued innovation for gaming operators and their
players around the world. I am incredibly proud of the entire team
at DEQ for all that we have achieved."
Transaction Details
The acquisition of the shares of DEQ will be completed by a
court approved plan of arrangement under the Canada Business
Corporations Act (the "Arrangement") and will require the
approval of 66 2/3 percent of the votes cast by DEQ shareholders at
a special meeting of shareholders of DEQ expected to be held in
late October or early November.
All of the directors and executive officers of DEQ have entered
into support agreements pursuant to which they have agreed to vote
in favor of the Arrangement.
In addition to the requisite shareholder and court approvals,
completion of the Arrangement will be subject to certain regulatory
approvals, including that of the TSX Venture Exchange and the
satisfaction of certain other closing conditions customary for a
transaction of this nature.
The Agreement contains customary representations and warranties
of each party and interim operations covenants by DEQ. The
Agreement includes customary deal protections, including a covenant
of DEQ not to solicit other acquisition proposals and a right to
match provision in favor of Scientific Games.
Recommendation of the DEQ Board of Directors
DEQ formed a special committee of independent directors to
conduct an exhaustive process to identify and evaluate a variety of
potential strategic alternatives to enhance shareholder value and
act in the best interests of DEQ as a whole. Based on the
recommendation of the special committee, DEQ's Board of Directors
unanimously approved the transaction and will recommend that its
shareholders vote in favor of the transaction. The DEQ Board has
determined that the Arrangement is in the best interests of DEQ
based on a number of factors, including a fairness opinion received
from Union Gaming Securities, LLC.
Information Circular and DEQ Shareholders Meeting
A management proxy circular for the DEQ special meeting of
shareholders is expected to be mailed to DEQ's shareholders in late
September or early October, providing shareholders with important
information about the transaction. Details of the transaction, as
well as the rationale for the support of the transaction by DEQ's
Board of Directors and a copy of the Fairness Opinion, will be set
out in the proxy circular.
A copy of the Agreement, the DEQ proxy materials and related
documents will be filed on DEQ's profile on SEDAR and will be
available at www.sedar.com.
Advisors on the Transaction
McMillan LLP is acting as legal counsel to Scientific Games.
Union Gaming Securities, LLC is acting as financial advisor to DEQ,
and Osler, Hoskin & Harcourt
LLP is acting as legal counsel to DEQ.
© 2016 Scientific Games Corporation. All Rights Reserved. All ®
notices signify marks registered in the
United States.
About Scientific Games
Scientific Games
Corporation (NASDAQ:SGMS) is a leading developer of
technology-based products and services and associated content for
worldwide gaming, lottery and interactive markets. The Company's
portfolio includes gaming machines, game content and systems; table
games products and shufflers; instant and draw-based lottery games;
server-based lottery and gaming systems; sports betting technology;
loyalty and rewards programs; and interactive content and services.
For more information, please visit ScientificGames.com.
About DEQ Systems
DEQ Systems Corp. (TSXV: DEQ) is one
of the market leaders in Table Games, Progressive Systems,
Proprietary Table Games content and Utility solutions. DEQ's
systems and games are installed in over 300 casinos, in 30
countries around the world. The combination of our services,
industry leading products and revenue generation capabilities make
DEQ a leader for innovation in the table game bonusing segment of
the global gaming market. For more information, please visit
www.deq.com.
SCIENTIFIC GAMES COMPANY CONTACTS:
Investor
Relations:
Scientific Games: Bill
Pfund +1 702-532-7663
Vice President, Investor Relations
bill.pfund@scientificgames.com
Media Relations:
Scientific Games: Susan Cartwright +1 702-532-7981
Vice President, Corporate Communications
Susan.cartwright@scientificgames.com
DEQ COMPANY CONTACTS:
Investor
Relations:
DEQ: Joe Bertolone
+775-450-0115
President & Chief Executive Officer
Joe.Bertolone@DEQ.com
Media Relations:
DEQ: Charles
Meredith +702-703-9518
Chief Legal Officer & Corporate Secretary
Charles.Meredith@DEQ.com
Forward-Looking Statements
This press release includes "forward-looking statements"
and "forward looking information" (collectively "forward looking
statements") within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 and Canadian securities
laws. Forward-looking statements describe future expectations,
plans, results or strategies and can often be identified by the use
of terminology such as "may," "will," "estimate," "intend," "plan,"
"continue," "believe," "expect," "anticipate," "estimate,"
"should," "could," "potential," "opportunity," or similar
terminology. These statements are based upon management's current
expectations, beliefs, assumptions and estimates and are not
guarantees of timing, future results or performance.
Similarly, statements herein that describe the proposed
transaction, including its financial impact, and other statements
of management's expectations, beliefs, assumptions, estimates and
goals regarding the proposed transaction are forward-looking
statements. It is uncertain whether any of the events or results
anticipated by the forward-looking statements (including
consummation of the proposed transaction) will transpire or occur,
or if any of them do, what impact they will have on the results of
operations and financial condition of the combined company or the
price of Scientific Games' or DEQ's stock. These forward-looking
statements involve certain risks and uncertainties and other
factors that could cause actual results to differ materially from
those indicated in such forward-looking statements, including but
not limited to: uncertainties as to the timing of the consummation
of the proposed transaction and the ability of the parties to
consummate the proposed transaction; the satisfaction of the
conditions precedent to consummation of the proposed transaction,
including the approval of DEQ's stockholders; the ability to obtain
required gaming approvals at all or in a timely manner; litigation
related to the proposed transaction; disruption of current plans
and operations as a result of the proposed transaction; competitive
responses to the proposed transaction; unexpected costs, charges or
expenses resulting from the proposed transaction; the ability of
Scientific Games to integrate DEQ's businesses; the ability of
Scientific Games to implement its plans, forecasts and other
expectations with respect to DEQ's business after the completion of
the transaction; and the other risks, uncertainties and important
factors contained and identified (including under the heading "Risk
Factors") in Scientific Games' filings with the Securities and
Exchange Commission and under the heading "Business Risks and
Uncertainties" in DEQ's filings with Canadian securities
commissions, any of which could cause actual results to differ
materially from the forward-looking statements. The forward-looking
statements included in this press release are made only as of the
date hereof and, except for Scientific Games' and DEQ's
ongoing obligations under applicable securities laws, neither
Scientific Games nor DEQ undertakes any obligation to update
any forward-looking statements whether as a result of new
information, future events or otherwise. DEQ is responsible for the
information in this press release concerning DEQ and Scientific
Games is responsible for the information in this release concerning
Scientific Games. Readers are cautioned not to place undue reliance
on any of these forward-looking statements.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
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SOURCE Scientific Games Corporation