Shares in International Game Technology (IGT) have surged by more than 14% after the company revealed it is evaluating strategic alternatives for its Global Gaming and PlayDigital segments.

IGT is considering a wide range of options, including a potential sale, merger or spin-off, as well as retaining and further investing in the Global Gaming and PlayDigital businesses.

“Over the last three years, IGT has sharpened its strategic focus by reorganising around core product verticals, monetising non-core assets, reducing structural costs and significantly improving its credit profile,” said IGT executive chair Marco Sala (pictured left).

“We believe the intrinsic value of IGT’s market-leading businesses and diversified cash flow profile is not currently reflected in our stock price and the timing is right to assess opportunities that may enhance value for IGT’s shareholders,” he explained.

Growing segments

IGT’s revenue in the first quarter of 2023 reached $1.06bn, showing a modest growth of 1% compared to the same period in 2022.

However, revenue from the Global Gaming segment increased by 17% to $381m, while PlayDigital revenue experienced a similar growth of 17% to $55m.

Profit targets

IGT CEO Vince Sadusky commented: “IGT is a global leader with deep expertise in lottery, land-based gaming, iGaming and sports betting.

“Regardless of the outcome of this process, IGT is well-positioned to deliver on its long-term growth and profit targets.”

IGT anticipates its 2023 revenue to fall within the range of $4.1bn to $4.3bn.

Additionally, the company aims to sustain a robust operating income margin between 21% and 23%.

To assist with the exploration of strategic alternatives, IGT has enlisted the services of financial advisers Deutsche Bank, Macquarie Capital, and Mediobanca.

Legal counsel is being provided by Sidley Austin and White & Case.

IGT stressed that no decision has been made regarding any alternative, and there is no timeline for the review process.

Furthermore, the company does not guarantee that this exploration will result in any transaction.

Investors reacted positively to the news, which resulted in a significant increase of over 14% in IGT’s share price.

Affiliate group XLMedia has pledged to explore the potential sale of its Personal Finance assets as part of a wider restructuring exercise.

The company said the process is currently underway and the business is in talks with “a number of potentially interested parties”.

However, it added there can be no certainty that any offer will be received, nor as to the terms on which any such offer might be made.

The London-listed company further said that the move reflects the “decision to prioritise resource allocation to its core activities” and to remain “focused on fully capturing the North America market opportunity in sports and gaming,” while also rebuilding its European sports and gaming operations to seek maximum value for shareholders.

Personal finance contributed just 2% to XLMedia’s total revenue of $44.5m in the first six months of 2022, down from 15% in H1 2020.

Presenting its half-yearly results, the company said the business unit was not profitable and had estimated that it would post a loss in the region of $1-2m for 2022.

US sports betting revenue, however, increased more than fivefold annually to $30.2m for H1 2022, up from just $5.9m in the prior-corresponding period.

To bolster its US presence, XLMedia made an early move into Massachusetts via an expanded partnership with US publisher Advance Local.

In October, XLMedia appointed its VP of sports media Kevin Duffy to the newly created role of VP of North America sports, while most recently, the firm struck a sports content partnership deal with publishing brand Newsweek.

Newsweek has since become XLMedia’s largest national media partner to date, offering the affiliate substantial audience reach across the US.

This year has seen several online gambling companies look to shift their financial trading assets in a move to focus on core assets.

XLMedia’s affiliate rival Catena Media put its trading assets up for grabs as part of a strategic review, while Playtech finally completed the $250m sale of financial trading division Finalto to Gopher Investments.