Making it the latest Rhode Island company to be bought by a European firm, GTECH Holdings Corp. announced last week that it has entered into an agreement to be acquired by Lottomatica SpA, a Rome-based company that operates Italy's Lotto.
The $4.8-billion deal will merge the West Greenwich-based company with the operator of one of the world's largest lotteries. Once combined, the two companies would have approximately 6,300 employees with operations in more than 50 countries.
Under the agreement, Lottomatica will acquire all outstanding shares of GTECH stock, purchasing each for $35 cash. After the purchase is completed, GTECH's shares will be removed from the New York Stock Exchange.
De Agostini SpA, an Italian financial holding group that owns 58 percent of Lottomatica, is supporting the deal, which is being financed through cash, rights issues, loans and securities expected to be issued in May.
The transaction allows GTECH to fulfill its existing commitments to Rhode Island, something that officials within the company said they hoped to do when news of a possible sale broke in September.
According to the company, GTECH will continue operations as a wholly-owned subsidiary of Lottomatica, maintaining its name. GTECH Vice President for Corporate Communications Robert Vincent said this means that the company will still occupy its planned headquarters in downtown Providence, currently being constructed across from Providence Place mall.
Additionally, because there is little overlap between GTECH and Lottomatica operationally, the companies do not anticipate major disruptions in work forces. Where GTECH is a gaming technology and services company, Lottomatica is a lottery operator that also works in sports games, and betting and commercial services.
"From the day-to-day perspective, if you're an employee or if you're someone in Rhode Island looking at GTECH, GTECH will continue to be GTECH," Vincent said. "It's not going to have a major impact on our employment levels or the way we go about servicing our customers."
The transaction, expected to be completed midyear, is subject to receipt of financing, approval by GTECH's shareholders and regulatory approvals, according to a company statement.
The acquisition is also not expected to interrupt GTECH's current business, Vincent said. Thirteen of the company's contracts, including one with the state of Rhode Island, have change-of-control provisions, he said.
(In a statement issued last week, Gov. Donald L. Carcieri said the R.I. Department of Administration, which is in charge of Rhode Island's lottery, has begun the process of approving the agreement.)
The company is in the process of seeking permission to assign the contracts to Lottomatica.
Additionally, the company still plans to proceed with its acquisition of Atronic International, Vincent said. However, that deal will likely be delayed a couple of months because of the change in licensing created by the Lottomatica deal.
Under the Italian company's new structure, W. Bruce Turner, president and CEO of GTECH, will become CEO of Lottomatica. He is expected to become a member of the company's board of directors and will retain his position at GTECH. Jaymin Patel, the company's current chief financial officer, is expected to hold that position for Lottomatica.
Other members of the company's management team are expected to retain their positions at GTECH.
Rosario Bifulco, current chairman and CEO of Lottomatica, will step down from his positions after four years. Marco Sala, current general manager of Lottamatica, is expected to become managing director of the company - a position that would likely make him responsible for the company's Italian operations.
Vincent called it "unique" to have the acquired company's management team turn around and lead the purchasing company.
With the acquisition, GTECH will gain insight into one of the top lottery operators in the world, Vincent said.
Additionally, the deal will move GTECH's operations into a new area - commercial services. Aside from gaming, Lottomatica also works in commercial services, in areas such as bill payments.
"We'll be able to offer a lot of their products across our customer base, so that's kind of an interesting growth area as well," Vincent said.
In an interview last week, R.I. Economic Development Corporation Executive Director Michael McMahon said he thinks the transaction will ultimately be positive for Rhode Island. Lottomatica's purchase would make GTECH a stronger company, McMahon said, helping to foster its growth financially and operationally. With Lottomatica's European base, he also said the deal will likely give GTECH a reach into markets in which it previously had not operated.
In statements, other officials expressed optimism about what the transaction will mean for Rhode Island.
"I was pleased to learn that GTECH will continue to play an important role in Rhode Island, and that no job losses are anticipated," Carcieri said in a statement last week. "GTECH's senior management team will be in charge of the new company, and will continue to be based in the Ocean State. By making GTECH part of the largest lottery company in the world, I hope that this sale will provide opportunities for expansion and more jobs in Rhode Island."
House Speaker William J. Murphy, D-West Warwick, released a statement that said GTECH has been an "excellent partner" for the state and that he hoped to see the relationship grow.
"Obviously, we want to make sure this relationship continues to be strong and that GTECH maintains its physical presence here," Murphy said in the statement. "I look forward to meeting with the new ownership in the near future to cement this relationship and to convince them to possibly expand their presence in Rhode Island."
The agreement, approved by the boards of directors of both companies, ended months of speculation that the Rhode Island gaming giant would likely be sold. In September, GTECH officials said they had received an "unsolicited" offer for the company's acquisition. The offer, which did not come from Lottomatica, triggered a process that led to last week's announcement, Vincent said.
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