Why Science Games Are Soaring and SciPlay is Falling Today

What happened

Shares of Science games (NASDAQ: SGMS) jumped 9.2% in morning trading on Thursday after the global gaming company withdrew its offer to buy the remaining 19% interest in SciPlay (NASDAQ: SCPL) that he does not already have.

SciPlay stock plunged 18% on the announcement. The deal was announced in July as an all-stock offer at a price of 0.250 Scientific Games shares for each SciPlay share held. Scientific Games will retain its 81% stake in SciPlay.

Image source: Getty Images.

So what

The attempted acquisition was part of Scientific Games’ efforts to focus more on digital game markets. It recently announced plans to divest its lottery and sports betting businesses for approximately $7 billion, and those deals are still on track to close in the second quarter of 2022.

SciPlay develops and publishes digital games for mobile and web platforms, offering casino games like Jackpot Party Casino and Fast Slots and casual Internet games such as Monopoly Slot Machines and Bingo Showdown. It will continue to have access to Scientific Games’ library of over 1,500 real-world slot and table games.

Now what

The two sides could not come to an agreement after a special committee made up of independent members of the SciPlay board of directors rejected the initial offer to exchange shares from Scientific Games.

Scientific Games had made it clear in its initial offer that it was not interested in negotiating the terms of the deal and would not consider any other offers. “We are only interested in the transaction specified above with respect to the publicly traded shares of SciPlay,” the offer letter stated, and he did not want to hear about any further potential sales of the company to third parties. third.

While a combination of the two makes sense, the rigidity Scientific Games held to the initial offer confirms management’s discipline and suggests the game company believes its stock is undervalued.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.


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