Scientific Games selling lottery business for $6.05B

Las Vegas-based Scientific Games Corp. is selling its lottery business to a private equity firm based in New York that specializes in acquisitions, the company reported Wednesday.

Brookfield Business Partners LP, which operates as a subsidiary of Brookfield Asset Management Inc., and has operations in Hamilton, Bermuda, is paying $6.05 billion for Scientific’s Atlanta-based lottery operation.

Brookfield will pay $5.825 billion in cash and an earn-out of up to $225 million based on Scientific Lottery hitting certain cash flow targets in 2022 and 2023.

Scientific’s lottery division partners with about 130 government and nongovernment lottery entities in more than 50 countries.

The deal is expected to close in the second quarter of 2022 and is subject to regulatory approvals.

“This transaction is transformative in accelerating the delivery of our stated strategy to optimize our portfolio, aggressively de-lever our balance sheet and position us to invest in future growth,” Scientific Games President and CEO Barry Cottle said in a release. “We conducted a thorough review of paths to divest the lottery business and we are confident that this transaction maximizes value and certainty while minimizing complexity and execution risk, and positions both Scientific Games and SG Lottery for continued success along their unique growth trajectories.”

Cottle said the lottery transaction as well as the company’s previous announced sale of its sports-betting business “will transform our balance sheet and provide the financial flexibility to invest organically and inorganically to accelerate our strategies.

“This marks a major milestone and puts us on a clear path to achieve our vision to become the leading cross-platform global game company and unlock our full value for shareholders,”Cottle said.

The head of Scientific Games Lottery said he expects continued growth in the division under Brookfield.

“We are thrilled with this outcome and what it means for the future of Scientific Games Lottery and our customers,” Patrick McHugh, chief executive of Scientific Games Lottery, said in a release. “I am confident that, with Brookfield’s support, we will have the flexibility and agility to expand our deep product portfolio to meet our customers’ evolving needs and maximize lottery beneficiary proceeds across the globe, enabling us to capture the significant opportunities we see ahead.”

David Nowak, managing partner of Brookfield Business Partners, also is confident that his company will benefit from the deal.

“The Scientific Games Lottery team has built a leading business, which has innovated its industry, at the convergence of games, technology and services, across retail and digital channels for its global customers,” Nowak said. “With our capabilities and global reach, we look forward to supporting management in the continued growth of the business.”

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