Scientific Games Corporation and DEQ Systems Corp.  announced that they've entered right into a definitive agreement under which Scientific Games will acquire all of DEQ's issued and outstanding common shares for a cash payment of CAD$0.38 per share.

The transaction is anticipated to near within the fourth quarter of 2016 or the primary quarter of 2017, subject to approval by DEQ's shareholders, receipt of gaming approvals in certain jurisdictions, and other customary closing conditions. DEQ generated revenue of CAD$9.5 million with gross profit of CAD$8.1 million on a trailing 12-month basis for the period ended May 31, 2016.

Scientific Games Senior Vp - Table & Utility Products Roger Snow said, "The DEQ team has grown an improbable business excited by providing revenue-generating and entertaining solutions for casino operators all over the world. Their established and high-performing library of table games, table progressives, and random bonusing systems will enhance our offerings, add to our recurring revenue base, and supply much more ways for casinos to interact players through Scientific Games' extensive end-to-end casino portfolio of gaming machines, casino systems, table products, and interactive solutions. We're especially eager about DEQ's EZ Baccarat®, the world's leading baccarat brand with nearly 800 table games in 150 casinos worldwide."

Scientific Games, already a pace-setter through its successful and proven Shuffle Master brand, now adds depth and breadth to its portfolio with the purchase of DEQ Systems' table games and table game progressives, including its suite of table progressives which give a recurring revenue stream.

DEQ Systems President and Chief Executive Officer Joseph Bertolone said, "We believe that it is a excellent transaction for our company. We glance forward to working closely with the Scientific Games team to make sure a smooth transition and continued innovation for gaming operators and their players world wide. I'M incredibly happy with all of the team at DEQ for all that we've got achieved."

Transaction Details

The acquisition of the shares of DEQ may be completed by a court approved plan of arrangement under the Canada Business Corporations Act (the "Arrangement") and can require the approval of 66 2/3 percent of the votes cast by DEQ shareholders at a different meeting of shareholders of DEQ expected to be held in late October or early November.

All of the administrators and executive officers of DEQ have entered into support agreements pursuant to which they have got agreed to vote in favor of the Arrangement.

In addition to the requisite shareholder and court approvals, completion of the Arrangement might be subject to certain regulatory approvals, including that of the TSX Venture Exchange and the satisfaction of certain other closing conditions customary for a transaction of this nature.

The Agreement contains customary representations and warranties of every party and interim operations covenants by DEQ. The Agreement includes customary deal protections, including a covenant of DEQ to not solicit other acquisition proposals and a right to check provision in favor of Scientific Games.

Recommendation of the DEQ Board of Directors 

DEQ formed a unique committee of independent directors to conduct an exhaustive process to spot and evaluate a number of potential strategic alternatives to improve shareholder value and act within the best interests of DEQ as a complete. In line with the advice of the special committee, DEQ's Board of Directors unanimously approved the transaction and can recommend that its shareholders vote in favor of the transaction. The DEQ Board has determined that the Arrangement is within the best interests of DEQ in accordance with a variety of factors, including a fairness opinion received from Union Gaming Securities, LLC.

Information Circular and DEQ Shareholders Meeting

A management proxy circular for the DEQ special meeting of shareholders is predicted to be mailed to DEQ's shareholders in late September or early October, providing shareholders with important details about the transaction. Details of the transaction, in addition to the explanation for the support of the transaction by DEQ's Board of Directors and a duplicate of the Fairness Opinion, could be set out within the proxy circular.

Read More... [Source: Gaming Industry News]