The proposed acquisition of
WMS Industries Inc.
Scientific Games Corp.
) has seemingly hit a roadblock after a WMS share holder, David
Shaev, sued the former in the Delaware Chancery Court, according
to Bloomberg. The lawsuit is related to Scientific Games' recent
agreement to acquire WMS Industries, a supplier of gaming
machines and interactive gaming content, for $1.50 billion.
The WMS investor, David Shaev, had alleged that WMS directors
agreed to the takeover at an unfair price (Scientific Games had
agreed to $26 per share for the acquisition). The complainant
also stated that the current deal did not realize the full value
of WMS Industries. David Shaev has appealed to the court to
prevent the sale.
WMS Industries provides video gaming machines to the casino
industry. The company's online interactive business also develops
games for the causal, social and mobile segments.
Scientific Games' acquisition of WMS Industries will likely
diversify the former's product portfolio and expand its global
footprint. Moreover, the current deal will also diversify
Scientific Games' revenue stream from lottery-based products and
cross sell WMS Industries' interactive gaming products and
Acquisitions have been a part of Scientific Game's growth
story. Barcrest Group Limited (acquired in 2011), Sceptre Leisure
Solutions (in 2010) and GameLogic (also in 2010) have expanded
Scientific Games' ability to offer computerized systems and
services to the global gaming industry thus keeping it abreast of
changes in the market.
We believe that the company's diversified product offerings,
international development activities, recurring revenue business
model and strong growth from the Internet-based business will
drive the stock over the long term.
Moreover, the company's acquisition strategy is expected to
provide Scientific Games a significant competitive edge over
rivals like GTECH,
International Game Technology
) and Lottomatica going forward.
The sluggish macroeconomic conditions in important
international markets is however the primary headwind for
Scientific Games going forward. Increasing investments for
product development is also expected to hurt profitability in the
Currently, Scientific Games has a Zacks Rank #3 (Hold).
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