Big investors liked the story Aristocrat Leisure (ALL) spun them on Monday about its big planned US acquisition, even if the cost was above some early market estimates.
Aristocrat yesterday announced it had successfully raised $375 million from fund managers to fund the $1.4 billion acquisition of privately-owned US rival Video Gaming Technologies.
The company told the ASX yesterday the share placement was oversubscribed at a price of $5.26 a share, a tiny 2.4% discount to the stock’s closing price on Friday of $5.39.
In fact the shares closed yesterday at $5.30 (only down 1.6%), giving those who took up the placement a small first day profit – a sign investors are confident the big deal will work.
Around 71.3 million shares will be issued under the placement, with more to be issued to the vaue of $60 million in issues to the Ainsworth family and to the company’s retail investors.
ALL YTD – Aristocrat shares survive big placement
Aristocrat chief financial officer Toni Korsanos said the company had been shown strong support by new and existing institutional shareholders.
“This is an important vote of confidence, both in the compelling VGT acquisition and Aristocrat’s broader growth strategy,” she said in a statement.
Aristocrat announced the $US1.3 billion ($A1.4 billion) acquisition of VGT on Monday.
The deal will give the company 20,200 new installed machines in the US market that it will earn sales on through revenue sharing agreements with gambling venues.
These machines aren’t marketable outside the US, so it means Aristocrat will be more dependent on that market for further earnings growth than it has ever been.
VGT has a significant presence in casinos operated by native Americans, known as the tribal gaming market. Aristocrat machines are mostly in Las Vegas.
According to media reports last week, some analysts claimed the takeover would value VGT at around $US550 million.
That’s a considerable miss and due to the fact that the financials of the US company weren’t readily available because its privately-owned.
