GTECH Corporation: GTech to buy Leeward Islands Lottery
World's largest lottery systems operator plans to acquire Caribbean-based Leeward for $40 million
GTech Holdings Corp., the world's largest lottery systems operator, on Monday said it would acquire a lottery operator based in the Caribbean for $40 million in cash.
It said the acquisition of privately held Leeward Islands Lottery Holding Co., based in Antigua and St. Croix, gives it an entry to an important market.
"We believe the acquisition of LILHCo gives GTECH a strategic foothold in the Caribbean lottery market, particularly with its regional Caribbean Lotto game, and also represents significant growth opportunities in additional jurisdictions within the Caribbean islands," said GTech Chief Executive Bruce Turner.
Under the terms of the acquisition, GTech will gain eight lottery contracts from LILHCo, which operates lotteries in Barbados, Bermuda, and the U.S. Virgin Islands.
GTech said LILHCo will provide a gross revenue contribution of $20 million to $25 million, and a net revenue contribution of $6 million to $8 million, for the fiscal year ending Feb. 26, 2005.
West Greeenwich, R.I.-based GTech expects the acquisition, contingent on regulatory and gaming license approvals, to close in the first quarter of fiscal year 2005.
GTech in March said it expected revenue and earnings per share to rise annually through 2008, as it plans to invest more of its free cash flow in acquisitions and other investments.
GTech in November bought Spielo Manufacturing, a maker of video lottery terminals, a type of slot machine, to keep pace with the growth in video gambling.
"Our recent acquisition of Spielo further enhances the value of LILHCo, given the potential of the growing video lottery business in the Caribbean community," Turner said.
Leeward recently obtained a 10-year video lottery terminal license in the Turks and Caicos Islands and a confirmation that its existing license in the Caribbean islands of St. Kitts and Nevis allows for the installation of video lottery gaming.
Gtech expects annual revenue growth of an average 12 percent to 15 percent from 2004 to 2008, and forecast earnings-per-share gains of an average 15 percent to 18 percent annually through 2008.
It said it expects the Leeward acquisition to be neutral to earnings this fiscal year.