GTECH S.p.A.’s (ISE: GTK) Board of Directors (the “Board”) today formally approved the previously announced cross-border merger (the “Merger”) of GTECH into Georgia Worldwide PLC (NewCo) and the repurchase of up to 16,676,505 GTECH shares.
Cross-border Merger of GTECH into NewCo
The Merger is part of a broader transaction whereby GTECH will acquire International Game Technology (NYSE: IGT) pursuant to the Agreement and Plan of Merger (the “Agreement”) that was announced on July 16, 2014. NewCo’s Board of Directors also approved the Merger.
In the Merger, GTECH shareholders will receive one ordinary share in NewCo for each GTECH share they hold. The Merger is subject to the fulfillment of certain conditions precedent contained in the Agreement, including the listing of NewCo shares on the New York Stock Exchange (NYSE) and the receipt of required antitrust and gaming clearances. GTECH can terminate the Agreement, inter alia, in the event that withdrawal rights in excess of 20% of GTECH’s share capital outstanding as of the date of the Agreement are exercised.
GTECH shareholders who are not in favor of the Merger will be entitled to exercise their withdrawal rights within the timeframe and in the manner prescribed by Italian Law. The effectiveness of any withdrawal is subject to the completion of the Merger. Assuming that no withdrawal rights are exercised (and without taking into account treasury shares held on the Merger effective date, if any), it is expected that GTECH shareholders will own 100% of NewCo immediately following the Merger but prior to the IGT portion of the transaction and that, upon completion of the IGT portion of the transaction, current shareholders of IGT and GTECH will hold approximately 20% and 80%, respectively, of NewCo’s ordinary shares, with the De Agostini group holding approximately 47%.
Upon completion of the transactions contemplated by the Agreement, NewCo will become the parent holding company for the combined operations of GTECH and IGT, with its registered office in London. The group will have operating headquarters in Las Vegas, Providence and Rome. The name of NewCo may change before the effective date of the Merger.
To encourage long-term share ownership, as previously announced, NewCo will adopt a loyalty share program that will offer all NewCo shareholders (at the closing of the transaction and thereafter) that hold their NewCo ordinary shares continuously for at least three years, enhanced voting rights.
The Board has mandated the Chairman to convene an extraordinary meeting of GTECH shareholders to approve the Merger. Documentation regarding the Merger will be made available in places and under the terms established by law.
It should be noted that the F-4 filing documents regarding the IGT transaction will be available today at www.sec.gov.
New share repurchase program
Following the May 8, 2014 shareholder approval, the Board also approved a new share repurchase program for up to 16,676,505 shares equivalent to approximately 9.5% of GTECH’s share capital (the “Program”). The Program is designed to ensure the regular trading of GTECH shares in the event that anomalous movements occur due to excess volatility or lack of liquidity, pending the acquisition of IGT. The Program allows for purchases on the open market commencing on the date of the shareholders’ extraordinary meeting call, through the end of GTECH shareholders withdrawal right exercising period, in compliance with the Agreement. Mediobanca has been mandated to execute the Program.
The maximum number of shares that can be purchased on any given trading day cannot exceed 25% of the average daily trading volume of GTECH shares on the “Mercato Telematico Azionario” (Italian Stock Exchange) during the 20 days preceding the purchase date.
Shares may not be purchased at a price greater than the highest price of the most recent independent transaction and the current highest independent offer price on the Italian Stock Exchange, and the maximum repurchase price per GTECH share is €18.44 (GTECH’s closing price on the day of the Agreement). In addition, the maximum aggregate share repurchase consideration shall be in compliance with GTECH’s financing agreements in place from time to time.
Should purchases occur pursuant to the Program, GTECH will communicate details of the purchases based on current regulation.
As of today, GTECH holds 1,782,426 of its shares, amounting to 1.02% of its share capital. No subsidiary of the Company holds GTECH shares.