GTECH Corporation Reaches Agreement to Repurchase Camelot Shares

Strategic Insights -

GTECH Corporation has announced that it has reached an agreement in principle with Camelot Group, plc to repurchase GTECH's equity position in Camelot, the operator of the United Kingdom's National Lottery. Pursuant to the agreement, Camelot will pay GTECH £51 million (approximately $84 million) to purchase GTECH's shares. This repurchase will have no effect on GTECH's position as the principal supplier of goods and services to Camelot. GTECH Chairman and CEO, William Y. O'Connor, stated that the repurchase represents a good business decision for the company and its shareholders, and the proceeds will be used to fund strategic business objectives.

Key Takeaways:

  • GTECH Corporation has reached an agreement in principle with Camelot Group, plc to repurchase GTECH's equity position in Camelot for £51 million (approximately $84 million).
  • The repurchase will have no effect on GTECH's position as the principal supplier of goods and services to Camelot.
  • GTECH has held a 22.5% equity stake in Camelot, alongside Racal, De La Rue, and Cadbury Schweppes. Another British company, ICL, held a 10% equity stake.
  • GTECH has recorded an average of $18 million in equity income from Camelot annually over the last three fiscal years.
  • The consortium operates the U.K. National Lottery under a license that expires in 2001.
  • GTECH Corporation is the world's leading supplier of computerized on-line lottery products and services, with contracts to supply and/or operate lottery systems for 29 U.S. customers and 50 customers outside of the United States.
  • GTECH will use the proceeds from the repurchase to fund important strategic business objectives.
  • The current book value of the Camelot investment is approximately $52 million.

Statistics:

  • £51 million (approximately $84 million) - the amount paid by Camelot to GTECH for the repurchase of shares.
  • 22.5% - the percentage equity stake held by GTECH in Camelot.
  • 10% - the percentage equity stake held by ICL in Camelot.
  • $18 million - the average annual equity income from Camelot.
  • 2001 - the year in which the U.K. National Lottery license expires.

Sources:

  • GTECH Corporation press release, April 1, 1998
  • GTECH Corporation website: http://www.gtech.com (April 1998)