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Farallon Capital starts new position in International Game Technology

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International Game Technology position

Farallon Capital Management initiated a position in International Game Technology (IGT) during the third quarter. The position accounted for 2.21% of the fund’s 3Q14 portfolio.

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Overview of International Game Technology

International Game Technology is a global, end-to-end gaming company. It designs, develops, manufactures, and sells computerized gaming equipment, software, and game content across land-based, online real-money, and online social gaming platforms.

GTECH’s acquisition of IGT

In July 2014, GTECH SpA entered into a definitive merger agreement to purchase IGT for $4.7 billion in cash and stock. IGT’s shareholders were expected to receive an aggregate value of $18.25 per IGT share, or $13.69 in cash plus 0.1819 ordinary shares of the combined company for each share of IGT common stock owned. This represented a 46% premium to the June 6 closing price.

The new company will be listed on the New York Stock Exchange and will have revenues and EBITDA in excess of $6 billion and $2 billion, respectively, based on the last 12 trailing months ended March 31, 2014. By approaching the broader market, GTECH expects to attain over $280 million in synergies that will take the following forms:

  • industrial efficiencies
  • purchasing power leverage
  • manufacturing efficiencies
  • elimination of duplicate costs
  • natural revenue enhancement

On December 2, IGT shareholders exercised the right to sell their shares to GTECH. The two companies expect the transaction to close by the second quarter of 2015.

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IGT’s 3Q14 results

International Game Technology reported third-quarter net income of $11.4 million or $0.32 per diluted share compared to net income of $7.7 million or $0.20 per diluted share for the same period last year. Revenues totaled $134.8 million compared to $127.6 million for 3Q13. The company said, “Strong international performance continues to be a crucial driver of overall profitability.”

IGT also repurchased 520,000 shares of common stock for $9.1 million and declared a quarterly dividend of $0.11 per share.

Farallon’s other 3Q14 activities

During the third quarter, Farallon Capital Management also started new positions in Time Warner Inc. (TWX), Tim Hortons Inc. (THI), and Cognizant Technology Solutions (CTSH). The fund increased its positions in DIRECTV (DTV), Covidien plc (COV), Allergan Inc. (AGN), and Shire plc (SHPG). Positions sold by Farallon during the third quarter include Yahoo! Inc. (YHOO), Oracle Corp. (ORCL), and Weyerhaeuser Co. (WY).

The next part of this series will discuss Farallon’s new position in Cognizant Technology Solutions.

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