GGRAsia – Aristocrat confirms in talks with VGT

Aristocrat confirms in talks with VGT

Jun 26, 2014 Newsdesk Industry Talk, Latest News, Top of the deck, World

Australian gaming equipment maker Aristocrat Leisure Ltd has confirmed it is in “advanced discussions” about acquiring United States-based Video Gaming Technologies Inc.

Separately, at the Nevada Gaming Commission’s regulatory meeting in Las Vegas on June 19, Aristocrat Leisure made an application for “a continuous or delayed public offering” on behalf of its U.S. unit Aristocrat Technologies Inc.

Analysts indicated to GGRAsia that Aristocrat Technologies might be seeking to raise capital either in the form of debt or equity.

“Aristocrat confirms that it is in advanced discussions with VGT, and conducting final due diligence, however notes that there is no certainty that discussions will ultimately lead to a transaction,” the parent said in a filing to the Australian Securities Exchange Ltd on Wednesday.

VGT is a leading maker of so-called ‘Class II’ gaming machines whereby the game outcome is centrally determined rather than via the individual machine.

In the United States, Class II machines are typically associated with Tribal Gaming venues.

According to VGT’s website it has more than 20,000 terminals in more than 145 locations in the United States and Mexico with nearly all games leased to casinos under revenue sharing agreements.

Aristocrat is known chiefly for its so-called ‘Class III’ casino video slot machines, where the game outcome is determined by a computerised random number generator within each machine.

“Aristocrat has a disciplined approach to transactions and would only contemplate an acquisition that is consistent with its strategy, enhances shareholder value is materially accretive to earnings and cash flow,” added the firm.

Aristocrat Leisure posted a net profit of A$57.4 million (US$53.2 million) in the six months ended March 31, up by 9.1 percent from a year before, the company announced on May 28.

The firm has some of the best-performing slot games in the Macau casino market. It has however recently faced regulatory headwinds there with the shutdown market wide by the local gaming regulator of its high-grossing FA FA FA and Yellow Dragon link products. The blackout is now in its second month.

The decision of Macau’s Gaming Inspection and Coordination Bureau was taken after a single player alleged malfunctions had occurred on the jackpot displays of two separate Aristocrat machines at two different venues.

GGRAsia has made repeated requests to the bureau over the past month for more information on the progress of the case and when the machines might be switched back on, but no information has been forthcoming.