Scientific Games Corporation and WMS Industries have entered into a definitive agreement under which Scientific Games will acquire WMS for $26.00 in cash per common share or approximately $1.5 billion.

The transaction, which was unanimously approved by both the Scientific Games and WMS Boards of Directors, combines two leading companies in the gaming industry to create an organization that will supply an extensive range of products and services to public- and private-sector lottery and gaming customers throughout the world. Scientific Games is a leader in the supply of lottery instant tickets, lottery and video gaming systems and server-based gaming. WMS is a leader in the supply of gaming machines and interactive gaming content.

The $1.5 billion acquisition, which represents six times annual WMS EBITDA of $246 million plus company debt of $85 million and cash on hand of $55 million as of September 2012, is subject to the approvals of WMS shareholders and gaming regulatory authorities and other customary closing conditions. It is expected to be completed by the end of 2013.

Scientific Games has obtained committed financing for the transaction and the transaction is not subject to a financing contingency.06_SM0313_pic3_SciGames_display-video-offerings.jpg

“The acquisition of WMS is transformational for Scientific Games, enabling us to offer a complete portfolio of lottery and gaming products and services to both new and existing customers around the world,” said A. Lorne Weil, chairman and CEO of Scientific Games, in a prepared statement. “We expect to combine our game content, technology, operational capabilities and respective geographic footprints to create an enterprise poised to capitalize on significant growth opportunities around the globe.”

Indeed, the returns from a combined Scientific Games/WMS Industries could be quite lucrative, if the past year financial performance for both holds true. According to company reports, when anticipated synergies are excluded, the combined companies generated revenue of approximately $1.6 billion and attributable EBITDA of approximately $579 million over the trailing 12-month period ended September 2012.

“The combination of Scientific Games and WMS yields tremendous benefits to our customers, shareholders and employees,” said Brian R. Gamache, chairman and CEO of WMS. “We view this transaction as the next logical and strategic step in offering continued innovation in gaming. Shareholders will enjoy a meaningful premium for their shares and employees will have expanded career opportunities as part of a larger, broader and more diverse organization. We are delighted with this transaction and look forward to working with our new colleagues at Scientific Games.”