Scientific Games Corp. has entered into a definitive agreement to sell its racing and venue management businesses to Great Britain-based Sportech Plc for about $75 million.
The transaction, announced Jan. 27, shows the company’s strategy to “focus its business portfolio and drive sustainable, profitable growth,” Scientific Games said in a release.
Scientific Games said it will be able to “participate in future growth of the combined businesses of Sportech and Scientific Games Racing through an equity interest in Sportech that Scientific Games will receive as part of the transaction consideration.”
Scientific Games has long been a tote provider to the pari-mutuel industry, but it also does extensive business in the lottery area. Autotote, a division of Scientific Games, operated the Connecticut off-track betting system.
“The transaction announced today is an important strategic step in the evolution of Scientific Games as we strengthen our focus on our core global lottery and gaming businesses,” company president and chief executive officer Michael Chambrello said in a statement. “At the same time, the transaction with Sportech will enable us to participate in future opportunities for the combined business, which we expect to emerge as a global, leading provider in the pari-mutuel wagering industry.
“We believe there are significant opportunities for value creation by combining these businesses, and we are looking forward to realizing that potential value creation as a shareholder in Sportech.”
Under the terms of the agreement, which was approved by the boards of directors of both companies, Scientific Games will receive about $33 million in cash at closing, $10 million in deferred cash consideration payable in September 2013, and $32 million in Sportech stock, representing approximately 20% of the outstanding shares.
In 2009, Scientific Games Racing produced revenue of about $110 million, the company reported.
Said Ian Penrose, CEO of Sportech Plc: “This transaction will provide Sportech with a multi-sport, multi-channel gaming business. The combined entity, which will have global reach and will be one of the leading pari-mutuel product and systems providers, will optimize its existing and new technologies to capitalize on worldwide growth opportunities.”
Sportech focuses on “e-gaming” and football betting, according to its Web site.