SciPlay's Board Establishes Panel to Assess Light & Wonder's Merger Offer
SciPlay (Nasdaq: SCPL) informed the public on Thursday that its board of directors had established a particular committee to analyze the recently disclosed proposal from Light & Wonder (Nasdaq: LNW). The proposal intends to obtain the approximately 17% of the social casino creator which isn't currently owned by Light & Wonder.
Approximately one month ago, Light & Wonder proposed a $422 million cash transaction, or $20 per share, to acquire that 17% of SciPlay. This offer represents a 28.5% premium compared to SciPlay’s final closing price before it became public knowledge.
A statement from SciPlay described that the Special Committee has been delegated power to individually examine and assess the non-binding offer it received from Light & Wonder.
The members of the Special Committee are Gerald Cohen, April Henry, Michael Marchetti, and William Thompson, with Cohen and Henry serving as co-chairs. Lazard will provide financial advice, and Sullivan & Cromwell LLP will provide legal counsel to the committee.
Evaluating the Relationship Between Light & Wonder and SciPlay
There are clear ties between the two companies. Currently, Light & Wonder holds 83% of SciPlay's equity along with 98% of its voting interest, making it virtually impossible for the latter to consider a sale to another party. The social casino developer was previously part of Scientific Games and was spun off in 2019.
However, the SciPlay board is primarily independent of Light & Wonder. Only one director, Toni Korsanos, serves on both companies’ boards. Moreover, none of the four committee members tasked with evaluating the Light & Wonder takeover proposal have undisclosed connections to the suitor.
Out of the four-member committee, only Marchetti has direct experience in mobile gaming or social casinos. In the past, he served as Buffalo Studios' CEO – the creator of the well-known Bingo Blitz game. Buffalo Studios was subsequently purchased by Caesars Interactive, and the Bingo Blitz game is now governed by mobile games developer Playtika (Nasdaq: PLTK).
Investors should keep in mind SciPlay has not provided any guarantees that a deal will be struck. In reality, the two entities have only been separated less than two years, and Light & Wonder attempted to reacquire SciPlay during that period. These negotiations ultimately failed.
According to the statement, "there can be no assurance that any definitive offer will be made by Light & Wonder, that a definitive agreement will be executed relating to the Proposed Transaction, or that this or any other transaction will be accepted or consummated."
Potential Advantages for SciPlay if Reunifies with Light & Wonder
Since Light & Wonder's offer was made public on May 18, SciPlay's stock has fluctuated around $20, although it has not closed at this price. The stock closed at $19.35 on that day.
Some analysts believe that a reunion with Light & Wonder would benefit SciPlay. The parent company's ownership interest in the social casino entity somewhat depresses its valuation.
Coupled with that, Light & Wonder's 98% control of SciPlay's voting equity restricts multiple potential options for a sale. Consequently, it might be challenging for SciPlay to consider a sale to another party apart from its former parent.
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