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Italian Firm Lottomatica to Buy Gtech

January 11, 2006|From Associated Press

Italian lottery company Lottomatica struck a deal Tuesday to purchase U.S.-based Gtech Holdings Corp. for $4.65 billion in cash to create one of the world's largest gaming technology operators.

The companies valued the deal at $4.8 billion, including the assumption of Gtech debt, and said the combined company was expected to operate in more than 50 countries, with revenue of $1.9 billion and more than 6,300 employees.

West Greenwich, R.I.-based Gtech provides lottery systems -- including instant ticket machines and lottery terminals in convenience stores -- for 25 states, including California. It has 62 customers in more than 50 countries, spokeswoman Angela Wiczek said. Lottomatica holds the license for the Italian lottery, one of the biggest in the world.

Gtech has annual revenue of $1.26 billion, compared with the Italian company's $707 million.

The deal presents possible regulatory hurdles because Gtech serves so many state lotteries, said Tom Burnett, director of research at Wall Street Access, a New York brokerage firm.

Gtech shares closed Monday at $33.50, giving it a market capitalization of $4.24 billion. Its shares fell 25 cents to $33.25 on Tuesday.

Lottomatica said it would buy all of Gtech's outstanding common stock for $35 a share. The offer represents a premium of 15% over the closing price of Gtech shares Sept. 9, the last trading day before Gtech announced that its board of directors had decided to explore strategic alternatives for the company.

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