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On Thursday, Scientific Games (NASDAQ: SGMS ) announced it has agreed to purchase all outstanding shares of WMS Industries (NYSE: WMS.DL ) for $26 per share, cash. The total stated value of the acquisition is $1.5 billion. Both companies' boards have voted unanimously to approve the combination.
Scientific Games is a leading supplier of "instant lottery" tickets, lottery and video gaming systems, and server-based gaming. WMS supplies gaming machines and interactive gaming content. Together, Scientific Games Chairman and Chief Executive Officer A. Lorne Weil says the companies will "combine our game content, technology, operational capabilities and respective geographic footprints to create an enterprise poised to capitalize on significant growth opportunities around the globe."
The combined companies produced about $1.6 billion in revenues over the past year, and generated earnings before interest, taxes, depreciation, and amortization of $579 million -- but only about $24 million in net profit. Scientific Games believes it can improve upon these numbers through "synergies" permitted by the combination, which is expected to close by the end of 2013.
WMS shares are up 51.2% on the news, at $24.75, still below Scientific's offer price. Scientific's own shares are also up -- 16%, to $10.36.