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Aristocrat to purchase VGT for $1.3bn

Aust

Aristocrat
ralian slot machine manufacturer Aristocrat Leisure has agreed to buy US gaming machine provider Video Gaming Technologies (VGT) for $1.3bn.

The cash purchase will give Aristocrat access to VGT's 20,000 slot and bingo machines in the US, alongside the 8,000 it already owns.

The majority of VGT's machines are leased to tribal casinos in Oklahoma, while the company has also expanded into California and Washington.

"Aristocrat appears to have made a shrewd acquisition," said Ben Le Brun, an analyst at brokerage firm OptionsXpress in Sydney. "VGT has a strong portfolio of gaming machines that will significantly bolster growth in the highly lucrative US market and give it greater potential in other areas of the world as well."

VGT generated pre-tax profit of $157m in 2013, all of which is recurring and underpinned by contracts with tribal casinos, according to the company.

The acquisition reflects a new focus on the US market for Aristocrat, where they reported 4.6% growth in the six months before March 2014, compared to a 19% drop in Australian earnings.

" VGT provides a unique opportunity to accelerate our growth in the US recurring revenue segment, which has for some time been an important strategic objective of Aristocrat,” said CEO Jamie Odell.

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