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John P. Gavin, CFA, is the founder and CEO of Disclosure Insight®, an independent publisher of investment research. Mr. Gavin has spent his entire career of over 25 years in the financial services industry. Prior to starting “DI” in 2000, he worked as an equity analyst and portfolio manager with... More
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  • IGT to Acquire Double Down - Position Itself to Take Advantage of Recent DOJ Gambling Opinion 0 comments
    Jan 13, 2012 12:10 PM | about stocks: IGT

    International Game Technology (NYSE: IGT) announced yesterday that it had reached a definitive agreement to acquire Double Down Interactive, an online social gaming company and developer of the DoubleDown Casino on Facebook. The acquisition will put IGT in position to take advantage of a massive untapped market should Facebook delve into real money gambling in the U.S., a real possibility in light of a recent DOJ opinion.

    Rumors have already swirled regarding Facebook’s interest in supporting real money gambling in the U.K. Presumably, as the social media giant does not appear to be morally opposed to gambling, it would pursue similar ventures in the U.S. should legal channels allow it. A recent DOJ ruling, regarding what was barred under federal laws, indicated that such legal pathways could be open in the near future, if they aren’t already.

    In its press release regarding the acquisition, IGT indicated that the DoubleDown Casino had approximately 4.7 million monthly active users, an impressive growth rate over an estimated 3.3 million users in Oct-11. It was also rated as a top 4 social media game in 2011 by Facebook.

    As part of the acquisition agreement, IGT will pay $250 million in cash up front, $85 million in retention payments over the next two years, and up to $165 million in contingent earn-outs over the next three years based on financial performance. The transaction is estimated to be accretive to FY12 earnings and is expected to close in fiscal 2Q12 (ending 31-Mar-12).

    Since Jun-07, IGT has completed 5 other acquisitions for approximately $265 million, $146 million of which was allocated to goodwill. Over the same time period, the company recorded $80 million in asset impairments and $36 million in restructuring charges.

    Stocks: IGT
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