Perelman Nears Scientific Games Stake Sale to Caledonia

Billionaire Ronald Perelman has agreed to sell his stake in Scientific Games Corp. to a group of investors that includes Australian investment firm Caledonia, which plans to overhaul the betting company’s board and strategy.

The acquirers are set to pay $28 per share for Perelman’s 34.9% stake in Las Vegas-based Scientific Games, which provides gambling products and services such as slot machines, the company said in a statement on Monday, confirming an earlier Bloomberg News report. That’s a 48% premium to the company’s closing price Friday of $18.97 and values the stake at about $925 million.

Shares of Scientific Games were up 46% to $27.69 at 10:47 a.m. in New York on Monday, the biggest one-day jump since July 1997.

The group led by Caledonia, which also has large stakes in companies such as Grubhub Inc., Warner Music Group Corp. and Zillow Group Inc., will add former Aristocrat Leisure Ltd. Chief Executive Officer Jamie Odell and ex-Chief Financial Officer Toni Korsanos to the board along with an additional independent non-executive director, the company said. Perelman and the two other executives from his investment firm MacAndrews & Forbes will step down.

The new board will be charged with helping to overhaul the company’s strategy and reduce debt. Scientific Games will increase its focus on digital gaming and growth in sports betting, according to the statement. The company’s stock had declined 29% this year through Friday.

Perelman disclosed his plans to explore a sale of his holdings in Scientific Games in a July filing. The billionaire, who sold two of his paintings for about $37 million in July, has authorized Sotheby’s to find buyers for hundreds of millions of dollars of additional works from his vast collection, Bloomberg News reported last month.

MacAndrews & Forbes currently backs a number of highly levered companies with debt trading at distressed levels, including Revlon Inc. and Vericast Corp. It recently sold its stake in Humvee-maker AM General LLC to private equity firm KPS Capital Partners.

Caledonia also owns a 10.4% stake in Flutter Entertainment Plc., the Irish gambling giant whose brands include Paddy Power and Sky Bet, according to its most recent regulatory filings.

Macquarie Group Ltd. advised Scientific Games, Deutsche Bank AG advised MacAndrews & Forbes, while Moelis & Co. advised Scientific Games’s special committee.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.