Gaming equipment providers International Game Technology (IGT) and Everi Holdings agreed to be acquired and combined in a new multibillion dollar transaction with hedge fund Apollo Global Management, one of the largest mergers the slot machine industry has seen in the past decade.

In an early morning announcement, IGT and Everi announced plans to cancel a previously announced merger agreement in favor of an all-cash transaction in which a new holding company formed by Apollo will acquire IGT’s slot machine and digital gaming operations for $4.05 billion in cash. Simultaneously, Apollo will acquire the outstanding stock in Everi for $14.25 per share — 56 percent higher than Everi’s closing price Thursday on the New York Stock Exchange. 

The combined transaction is valued at more than $6.3 billion and is expected to take more than a year to close, according to the statement. 

The slot machine industry has experienced a vast amount of change in the past decade. IGT’s 2015 buyout was one of two gaming industry mergers between the largest national and international lottery operators and the then-dominant casino industry slot machine providers. The other was when Scientific Games acquired Bally’s Technologies for $5.1 billion in 2014, which was unwound in 2022.

New technology, emerging companies and connectivity between emerging online gaming products have signaled a change in slot machine development and market conditions.

“We strongly believe in the value proposition of the combination and are confident these complementary gaming platforms will be even better positioned under private ownership to capture the opportunities ahead to grow and create value,” Apollo partner Daniel Cohen said in a statement, adding that the hedge fund has “long admired” both companies.

Apollo reportedly expressed an interest in acquiring IGT’s slot machine and gaming operations last year. The acquisition includes ownership of the Wheel of Fortune slot machine brand, as well as IGT’s digital business including its sports betting platform and sportsbook management operations.

The news caught the investment community off guard and sent shares of Everi up more than 40 percent in trading Friday to close at $12.82 per share. IGT’s stock price jumped almost 18 percent to $23.77 per share. Both companies are traded on the New York Stock Exchange.

“The new cash terms offer certainty to investors and despite potential longer-term upside, we see limited risks to the deal not closing,” Truist Securities gaming analyst Barry Jonas wrote in a research note Friday.

As in the previously announced agreement, the new businesses will be headquartered in Las Vegas, most likely under the IGT name. 

Everi, which provides slot machines, financial transaction services and management systems to casinos, is based in Las Vegas. IGT has a sales and marketing office in Las Vegas and a gaming equipment manufacturing center in Reno.  

IGT’s lottery business will remain headquartered in Italy under a new name. 

“We believe the new transaction is a much cleaner structure, eliminating unknown tax implications from a previously planned Everi share distribution to IGT shareholders, which has been the subject of pushback from investors,” B. Riley Securities gaming analyst David Bain wrote in a research note following the announcement.

This is the second multibillion-dollar purchase Apollo Global Management — a New York City-based asset management firm overseeing more than half a trillion dollars worth of assets — has made in the gaming industry. The company paid $2.25 billion to acquire the operations of The Venetian, Palazzo and Venetian Expo in 2022 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.

That same year, Apollo sold its 22 percent ownership in Las Vegas-based gaming equipment provider AGS, a stake the private equity firm has held for almost 10 years.

“It would appear improving capital market conditions and their view on an IGT gaming [and] EveriI combination has driven them to re-engage,” Jonas wrote of Apollo’s interest in the acquisition.

In one change from February’s agreement, current IGT CEO Vince Sadusky will remain with the lottery-focused company as opposed to becoming CEO of the newly merged business. A new CEO for the combined IGT-Everi business was not named.

Updated at 1:12 p.m. on 7/26/2024 to include the Everi and IGT closing stock prices.