Brookfield Business Partners to acquire Scientific Games Lottery for US $6.05B

CPE News

CPE News (10/27/2021) – Brookfield Business Partners L.P. (NYSE: BBU; TSX: BBU.UN), together with institutional partners, has agreed to acquire Scientific Games Corporation (NASDAQ: SGMS)’s global lottery services and technology business for up to US $6.05 billion, consisting of US $5.825 billion in cash and an earn-out of up to US $225 million based on the achievement of certain EBITDA targets in 2022 and 2023 (al $ figures in US dollars).

The transaction is expected to close in the second quarter of 2022, subject to applicable regulatory approvals and customary closing conditions.

The acquisition will be funded by approximately $2.6 billion of equity, 30% of which will be funded by Brookfield Business Partners with the remaining portion from institutional co-investors. Prior to or following closing, a portion of Brookfield Business Partners’ commitment may be syndicated to other institutional investors.

Debt financing will be led by a syndicate of banks including Barclays, Deutsche Bank Securities, BNP Paribas, Credit Agricole Corporate and Investment Bank, Macquarie Capital and RBC Capital Markets.

Cleary Gottlieb Steen & Hamilton LLP is acting as legal advisor to Brookfield.

Scientific Games’ Lottery business (Scientific Games Lottery or SG Lottery) is a leading, diversified global lottery partner with long-standing relationships with approximately 130 government and non-government lottery entities in over 50 countries. It provides an innovative suite of turn-key solutions covering the entire lottery ecosystem, including instant and terminal-generated lottery games, sports betting, lottery systems and retail technology and the fast-growing iLottery market.

SG Lottery will remain headquartered in metro-Atlanta with operations expected to continue around the world.

For the six months ended June 30, 2021, SG Lottery reported $514 million in revenues and $257 million in AEBITDA.

SG Lottery has entered into a Transitional Services Agreement with Scientific Games Corporation whereby Scientific Games Corporation will provide SG Lottery certain finance, information technology, regulatory compliance, legal, human resources and facilities at cost for an initial term of 12 months.

Macquarie Capital (USA) Inc. is serving as financial advisor and Cravath, Swaine & Moore LLP is serving as legal counsel to Scientific Games.

photo credit: SG Lottery

News Release

Brookfield to Acquire the Lottery Business of Scientific Games Corporation

BROOKFIELD, NEWS, Oct. 27, 2021 (GLOBE NEWSWIRE) — Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) (“Brookfield Business Partners”) together with institutional partners (collectively “Brookfield”) today announced an agreement to acquire Scientific Games Corporation’s global lottery services and technology business (“Scientific Games Lottery” or “the Business”) for approximately $5.8 billion.

With innovative capabilities in game design, production, distribution, systems and terminals, and turnkey technology solutions, Scientific Games Lottery has long-term relationships with approximately 130 lottery entities in over 50 countries. The Business is deeply integrated across the lottery ecosystem as an essential service provider to global lottery programs which represent a critical and growing source of funding for governments around the world.

“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,” said David Nowak, Managing Partner, Brookfield Business Partners. “We look forward to partnering with management and bringing our global scale and capabilities to support Scientific Games Lottery’s future growth.”

Investment Highlights

Strong market position. Scientific Games Lottery is a market leader supplying products, services and technology to leading lotteries around the world. The breadth of its product offering, scale and differentiated service offerings contribute to long-standing partnerships with its customer base.
Durable financial performance. The Business operates in a resilient industry, with favorable margins and low ongoing capital requirements. Its recurring revenue base is driven by a clear value proposition, strong customer relationships and contracts with high renewal rates.
Favorable market dynamics. Scientific Games Lottery is well positioned to meet strict regulatory frameworks and oversight which require high standards of service and security.
Opportunities for growth. The Business has access to multiple levers to drive future revenue growth, including expansion of service offerings to existing customers, participation in expected digital growth and new customer acquisition.

Funding

Brookfield’s investment will be funded with approximately $2.6 billion of equity.

Brookfield Business Partners intends to fund approximately 30% of the equity on closing from existing liquidity on-hand and capital which will be raised from internal initiatives currently underway. Brookfield Business Partners also recently increased the availability on its credit facilities by $500 million to maintain a strong corporate liquidity position.

The balance of the equity investment is expected to be funded by institutional partners. Prior to or following closing, a portion of Brookfield Business Partners’ commitment may be syndicated to other institutional investors.

Transaction Process

Closing of the transaction remains subject to customary closing conditions including regulatory approvals. Closing is expected in the second quarter of 2022.

Advisors

Financing will be led by a syndicate of banks including Barclays, Deutsche Bank Securities, BNP Paribas, Credit Agricole Corporate and Investment Bank, Macquarie Capital and RBC Capital Markets. Cleary Gottlieb Steen & Hamilton LLP is acting as legal advisor to Brookfield.

Brookfield Business Partners is a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs.

Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management, a leading global alternative asset manager with over $625 billion of assets under management. More information is available at www.brookfield.com.

Brookfield Business Partners is listed on the New York and Toronto stock exchanges. For more important information, please visit our website at https://bbu.brookfield.com.

For more information, please contact:

Investor Relations
Alan Fleming
Tel: +1 (416) 645 2736
Email: alan.fleming@brookfield.com

Media
Sebastien Bouchard
Tel: +1 (416) 943-7937
Email: sebastien.bouchard@brookfield.com