Aristocrat Leisure is in talks to purchase US competitor Video Gaming Technologies as consolidation continues to reshape the global machine gaming landscape.
The acquisition, following on Bally Technologies’ purchase of SHFL entertainment and Scientific Games’ purchase of WMS Industries, would significantly bolster Aristocrat’s North American presence, particularly in US tribal casino markets.
Reports say the Australian slots and systems giant (ASX: ALL) will pay about US$1 billion for Tennessee-based VGT, a privately held manufacturer known mainly as an innovator in the Class II and emerging-market sectors. The company has about 20,000 units in more than 145 locations in the United States and Mexico, most of them leased games distributed under revenue-sharing agreements.
Representatives for Aristocrat and VGT did not respond to requests for comment, according to Reuters, but the two companies have been in discussions for months, people familiar with the talks told the news agency, and while a deal is by no means certain, they said, it would go a considerable way toward furthering Aristocrat’s aggressive plans to grow in the US, where it has been taking market share.
In filing with the Australian Stock Exchange Aristocrat said only that there could be no guarantee of an eventual transaction and the company only considers purchases that “are consistent with its strategy, enhance shareholder value and are accretive to earnings”.
The trend toward consolidation in the slots sector is expected to continue, driven principally by sluggish sales in the US, which is beset by jurisdictional saturation, flat same-store casino revenue growth and the aging of the traditional slots customer base.
International Game Technology, the dominant US manufacturer, recently announced it was entertaining suitors and is reported to be in sale talks with lottery giant GTECH, private equity’s Carlyle Group and Apollo Global Management, which co-owns Caesars Entertainment, and an investment firm headed by SciGames Chairman Ron Perelman.
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