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Apollo plans to sell its 22 percent stake in Las Vegas-based slot maker AGS

Howard Stutz
Howard Stutz

Venetian operator Apollo Global Management is selling its 22 percent ownership in Las Vegas-based gaming equipment provider AGS, a stake the private equity firm has held for almost 10 years.

Apollo is the largest shareholder in AGS, which is one of the industry’s fastest-growing gaming equipment manufacturers.

According to a filing with the Securities and Exchange Commission late Monday, Apollo owns more than 8.2 million shares of AGS, which would be worth more than $52 million based on Monday’s closing price of $6.35 on the Nasdaq.

In a statement, AGS did not provide a reason for the sale and said the company would not receive any proceeds from the transaction.

The stake in AGS is small by Apollo’s standards, which previously owned Caesars Entertainment but sold the holdings in 2019, two years after the completion of a complicated two-year Chapter 11 bankruptcy restructuring that changed Caesars’ ownership structure and wiped $16 billion of the company’s pre-bankruptcy $25.6 billion in debt off the books.

Apollo paid $2.25 billion for the operations of the Venetian, Palazzo and Venetian Expo in February as part of a $6.25 billion purchase from Las Vegas Sands Corp. Real estate investment trust VICI paid $4 billion for the land and buildings.

Las Vegas Sands provided Apollo with $1.2 billion of seller financing, with the private equity company putting up another $1.05 billion in cash and financing.

Earlier this month, Apollo received preliminary approval from the Nevada Gaming Control Board to distribute a dividend of an estimated $620 million to investors and hand out bonuses to the resort’s 7,000 employees.

The departure of Apollo from AGS means a shake-up on the AGS board. Apollo Partner and Co-Head of Private Equity David Sambur serves as the company’s chairman and Apollo Partner Daniel Cohen is a board member.

“Apollo's 22 percent ownership has been a lingering investor hang-up,” Truist Securities gaming analyst Barry Jonas said in a research note Monday. “We think its exit could attract incremental investor interest.”

Apollo bought AGS in 2013 and directed the acquisition of 20 different gaming businesses, the largest being slot designer and supplier Cadillac Jack in 2015. Apollo took AGS public in January 2018 with an initial public offering of $16 a share.

In August, rival gaming equipment provider Inspired Entertainment offered to acquire AGS for $10 per share, a deal that was ultimately rejected.

Macquarie Securities gaming analyst Chad Beynon said in a research note Monday afternoon that the transaction discussions affirmed for AGS the value in the company’s stock.

The company has grown through its business with tribal casinos in Oklahoma and other states.

More than 70 percent of AGS revenue comes from slot machines that the company shares the proceeds from the games with casino operators.

“We continue to see AGS as a deep-value name in the space,” Beynon wrote. “AGS is well positioned to build the business in 2023 from higher (slot machine) sales, continued premium installed placements, higher table revenue, and growth in interactive gaming.”


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