Inside Asian Gaming

42 INSIDE ASIAN GAMING | February 2013 INTERNATIONAL BRIEFS WMS Seen as Strong Move for SciGames Wall Street had both praise and words of caution for the blockbuster merger that saw Scientific Games acquire slot manufacturer WMS Industries for US$1.42 billion in cash and the assumption of $85 million in debt. “The deal makes sense, and it was a good time for Scientific Games to pull the trigger,” Bill Lerner, managing director of Union Gaming Group told the Las Vegas Review-Journal . The New York-based lottery giant agreed to pay WMS stockholders US$26 per share—a 59% premium above the 30th January closing price—and assume the company’s debt. The buyout was pending WMS shareholder and regulatory approval and is expected to close by the end of the year. Nevada gaming regulators also have to sign off on the transaction. Scientific Games is not currently licensed in Nevada. Wells Fargo Securities gaming analyst Cameron McKnight said consolidation among gaming equipment manufacturers has been rumored and discussed for several years. “The acquisition makes sense for Scientific Games as it does not have a casino slot business at present, and we believe it has been evaluating entry into the casino market for some time.” SciGames Chairman A. Lorne Weil called the acquisition “transformational” for the lottery company and said it will open up new business markets. “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.” WMS, based in Waukegan, Ill., is considered the third-largest slot machine manufacturer behind International Game Technology and Bally Technologies. The company more recently has branched out into social gaming and interactive gaming platforms. Scientific Games is the smaller of the two companies, with a market capitalization of $756million. In its third quarter, the company reported revenues of $227.5 million and a net loss of $27.1 million. WMS has a market capitalization of $1.36 billion. The company reported revenues of $159.1 million in its first fiscal quarter and net income of $9.3 million. Spain hits Online Operators with €150M Tax Bill Spain has extracted some €150 million from foreign operators in exchange for licenses to operate online gambling in the country. Operators had no choice but to pay the levy, imposed on unregulated activity they pursued in the country from 2008 through 2011, or be excluded from the lucrative Spanish market, estimated at €27 billion in annual revenue. The operators, among the largest in Europe, complained that the laws used to justify the back tax are decades old and aren’t applicable to online businesses. “It was a measure [tax authorities] pulled out of their sleeve at the last moment,” said Laura Guillot, a Barcelona-based lawyer and independent consultant to the gaming industry. “It was not very elegant.” But it will go a ways toward helping the government deal with the political unpoularity of austerity measures that are being imposed in response to a listing economy and a massive sovereign debt problem. “A number of governments have already fallen across the euro zone trying to implement austerity,”Jonathan Loynes, chief European economist at Capital Economics in London, said. After taking office in December 2011, Budget Minister Cristobal Montoro suspended the licensing process and installed a new gaming director to determine who would be allowed to operate in Spain. The following March, operators began to receive letters from the government’s Tax Fraud Office demanding information about revenue from online gambling by Spanish residents going back to 2008. Two months later, according to news reports, Enrique Alejo, the head of gaming regulation appointed by Mr Montoro, told gaming executives they might be refused licenses unless they paid. Macau Operations Bolster LVS’ Q4 Earnings Las Vegas Sands Corp reported fourth-quarter revenue in Macau rose 48% year on year to US$1.97 billion. “They continue to outperform the market,” said Chad Mollman, a Morningstar Inc. analyst who recommends the stock. “Their new Sands Cotai Central is takingmarket share from casinos on the Macau peninsula, which is driving the outperformance.” A pickup in gambling in Macau, the company’s largest market, countered sluggish results for the industry in Nevada, where LVS operates the Venetian and Palazzo resorts, and another drop in Singapore. While sales rose for the company in Macau, revenue at the Marina Bay Sands in Singapore fell 11% year on year in Q4 after sliding 21% in Q3. Fourth-quarter revenue, including results from the US, rose 21% to US$3.08 billion. Fourth-quarter net income totaled $434.8 million, or 53 cents a share, little changed from $435.3 million, or 39 cents, a year earlier, the company said. Sands China Ltd, the company’s majority-owned Macau subsidiary, posted a 52% jump in fourth-quarter profit as its newest resort drew more visitors. Net income for the Hong Kong-listed unit Marina Bay Sands