Scientific Games Sells Lottos to Brookfield for $5.8 billion

Scientific Games Sells Lottos to Brookfield for $5.8 billion
The stock rose more than 6% in after-market trading.

Brookfield Asset Management Inc. has agreed to pay just under $6 billion for Scientific Games Corp.’s global lotteries business the firm announced Thursday. 

Brookfield Business Partners LP, an affiliate of the Canadian firm, will pay $5.8 billion including about $2.6 billion of equity for the business, which has long-term relationships with about 130 lottery entities in more than 50 countries, the firm said in a statement confirming an earlier report by Bloomberg.

The transaction caps months of speculation around how Las Vegas-based Scientific Games would unload the unit, which sells lottery tickets and scratch-off games.

The company said in June that it would explore divesting its lotteries and sports-betting units as part of a plan to reign in debt. Endeavor Group Holdings Inc. agreed in September to pay $1.2 billion for its betting business. 

“We are pleased to continue to grow our business with the acquisition of a market leader and essential service provider to governments around the world,” Brookfield Business Partners Managing Partner David Nowak said in the statement.

Apollo Interest

The lotto business had drawn interest from suitors including Apollo Global Management Inc., Bloomberg News reported this month. Scientific Games also considered taking it public in Australia. 

Brookfield was attracted to the business’s position as a market leader in an industry with economic durability, good margins and low capital requirements as well as opportunities for growth by expanding service offerings to customers, including online, among other factors, the firm said in the announcement.

Scientific Games rose 0.8% to close at $89.09 in New York on Wednesday, giving the company a market value of about $8.6 billion. The stock rose more than 6% in after-market trading. 

Brookfield, which is based in Toronto, is one of the largest alternative asset managers in the world with more than $625 billion in assets under management and operations in 30 countries around the world, according to its website.

Scientific Games has said it wants to focus on becoming a leading cross-platform global gaming company.

The deal is expected to close in the second quarter of 2022, Brookfield said.