Light & Wonder Renews SciPlay Acquisition Offer

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Posted on: May 18, 2023, 02:05h. 

Last updated on: May 18, 2023, 02:11h.

Nearly two years after it scrapped a similar overture, Light & Wonder (NASDAQ: LNW) bid anew for SciPlay (NASDAQ: SCPL), offering the social casino developer $422 million in cash, or $20 a share, for the 17% the former parent doesn’t yet own.

SciPlay bid
A slide from a 2019 SciPlay investor deck. Light & Wonder is offering to buy the 17% of the company it doesn’t already own. (Image: Seeking Alpha)

Currently, Light & Wonder owns 83% of the equity and 98% of the voting interest in SciPlay, making it nearly impossible for the latter to consider a sale to another party. Formerly the social gaming division of Scientific Games, SciPlay was spun off from that company in 2019.

In July 2021, Scientific Games offered an 11% premium to purchase the 19% of SciPlay it doesn’t own. The new offer, revealed in a letter from CEO and President Matt Wilson to Light & Wonder’s board of directors, implies an enterprise value of $2.1 billion for SciPlay and values that company at a 28.5% premium to Wednesday’s closing price.

Light & Wonder noted the transaction won’t require regulatory approval, it won’t perform due diligence on SciPlay, and it will fund the deal with cash on hand. SciPlay’s well-known offerings are Jackpot Party, Quick Hit Slots, Gold Fish Casino Slots, Hot Shot Casino, 88 Fortunes, Bingo Showdown, and Monopoly Slots.

Light & Wonder Sees Benefits, Efficiencies

In renewing its efforts to bring SciPlay back under the Light & Wonder umbrella, the suitor sees potential benefits in the proposed transaction.

Unify L&W’s businesses, enabling seamless collaboration with SciPlay that will add further momentum to the Company’s already robust cross-platform strategy; and combine the L&W and SciPlay balance sheets, providing flexibility to invest cash across the enterprise where it will best drive shareholder value,” according to a statement.

News of the proposal emerged eight months after activist investor Engine Capital urged SciPlay to consider selling itself to its former parent. Last October, Engine Capital estimated the social casino company is worth $15 to $16 a share.

Engine also claimed the valuation on Light & Wonder wasn’t adequate due to SciPlay being chronically undervalued in public markets.

Benefits for SciPlay Investors

While a closing date for the deal wasn’t mentioned and there are no assurances the transaction will reach the finish line, there are potential perks for SciPlay investors in rejoining Light & Wonder.

Through our existing collaboration with SciPlay, we believe the Transaction would be operationally seamless, and we look forward to fully joining forces with SciPlay’s talented leadership team and employees to continue innovating on behalf of customers and players,” opined Wilson in his letter to the board.

Additionally, the social casino space is growing and firms that offer in-app purchases, as does SciPlay, are seen as having attractive business models. However, the universe of related publicly traded stocks remains mostly ignored by professional investors.

For Light & Wonder, bringing SciPlay back in-house could bolster the suitor’s efforts to improve its iGaming footprint and diversify its revenue stream.

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