SciPlay Plunges 18.2% After Scientific Games Withdraws Takeover Offer

Nevada-based Scientific Games Corp. (NASDAQ:SGMS) has withdrawn its offer to acquire the remaining 19% stake in digital games company SciPlay Corp. (NASDAQ:SCPL). Scientific Games currently owns an 81% economic interest and 98% voting interest in SciPlay.

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Scientific Games made an all-stock offer to merge with SciPlay on July 15. As per the terms of the offer, for each share of SciPlay, shareholders would have received 0.25 shares of SGMS. These SciPlay shareholders would only be those who do not already own Scientific Games’ shares.

CEO and President of Scientific Games, Barry Cottle, said, “In line with our approach to capital management and disciplined M&A we have decided that continuing to pursue this opportunity would not be prudent for our shareholders at this time.”

Meanwhile, SciPlay said, “Based on its review and analysis, (our) Special Committee rejected Scientific Games’ initial proposal, and actively engaged with Scientific Games to negotiate terms that it believed better reflects the value of SciPlay.”

About Scientific Games

Scientific Games provides gambling and lottery products and services. Its brands include Bally, WMS, and Shuffle Master.

Following the announcement, the company’s shares surged nearly 8% in the extended trading session to end the day at $67.10.

Wall Street’s Take

After the company released its third-quarter results last month, Stifel Nicolaus analyst Jeffrey Stantial maintained a Hold rating on the stock and lowered the price target to $88 from $90 (41.5% upside potential).

The analyst said, “We remain positive on the long-term trajectory of the land-based business, and SGMS’ capital-efficient omnichannel gaming content-led strategy.”

Overall, the stock has a Moderate Buy consensus rating based on 4 Buys, 2 Holds, and 1 Sell. The average SGMS stock forecast of $87.57 implies a 40.8% upside potential. Shares have gained 57.5% year-to-date.

About SciPlay

Las Vegas-based SciPlay is engaged in the development and publishing of digital games on mobile and web platforms. It offers social casino games that include Jackpot Party Casino, Gold Fish Casino, Hot Shot Casino, and Quick Hit Slots, and casual games which include Monopoly Slots, Bingo Showdown, and 88 Fortunes Slots.

The company’s shares plunged 18.2% after the news was announced. Further, at the time of writing, they were trading 17.5% down in pre-market trading on Thursday.

Wall Street’s Take

Last month, Deutsche Bank analyst Benjamin Soff reiterated a Buy rating on the stock but reduced the price target to $21 from $22 (35.8% upside potential).

Further, Wedbush analyst Michael Pachter maintained a Hold rating on SciPlay with a price target of $17, which reflects upside potential of 10%.

Overall, the stock has a Moderate Buy consensus rating based on 1 Buy and 1 Hold. The average SciPlay price target of $19.00 implies 22.8% upside potential. Shares have lost 11.4% over the last six months.

Investor Opinions

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on SciPlay, with 5.3% of investors on TipRanks increasing their exposure to the stock over the past 30 days.