Scientific Games and Brookfield enter $6bn agreement for lottery division

Scientific Games has entered into a definitive agreement with Brookfield Business Partners to sell its lottery business for over $6bn.

Scientific Games Corporation has entered into a definitive agreement with Brookfield Business Partners to sell its lottery business for over $6bn. 

Expected to close in the second quarter of 2022, the transaction – consisting of $5.825bn in cash and an earn-out of up to $225m based on the achievement of certain EBITDA targets in 2022 and 2023 – is subject to applicable regulatory approvals and customary closing conditions. 

Barry Cottle, president and chief executive officer of Scientific Games, explained: “This transaction is transformative in accelerating the delivery of our stated strategy to optimise our portfolio, aggressively de-lever our balance sheet and position us to invest in future growth. 

“We conducted a thorough review of paths to divest the lottery business and we are confident that this transaction maximises value and certainty while minimising complexity and execution risk, and positions both Scientific Games and SG Lottery for continued success along their unique growth trajectories. 

“The significant near-term proceeds from this transaction as well as our previously announced sale of Sports Betting will transform our balance sheet and provide the financial flexibility to invest organically and inorganically to accelerate our strategies.

“This marks a major milestone and puts us on a clear path to achieve our vision to become the leading cross-platform global game company and unlock our full value for shareholders.”

Through the acquisition of SG Lottery, Brookfield is set to integrate a subsidiary which maintains partnerships with “approximately 130 government and non-government lottery entities in over 50 countries”, providing turn-key solutions including instant and terminal-generated lottery games, sports betting, lottery systems, retail technology and ilottery. 

Earlier this week, Bloomberg reported that Brookfield Asset Management was one of two international investment companies, alongside Apollo Global Management, interested in acquiring SG Lottery.

“We are thrilled with this outcome and what it means for the future of Scientific Games Lottery and our customers,” added Patrick McHugh, chief executive of Scientific Games Lottery.

“”I am confident that, with Brookfield’s support, we will have the flexibility and agility to expand our deep product portfolio to meet our customers’ evolving needs and maximise lottery beneficiary proceeds across the globe, enabling us to capture the significant opportunities we see ahead.”

As part of the announcement, David Nowak, managing partner at Brook Business Partners, lauded the Scientific lottery team for building a “leading business” and expressed his excitement towards the future of “supporting management in continued growth of the business.”