Scientific Games makes major wager on bid for WMS
BY DAVID ROEDER email@example.com January 31, 2013 10:32AM
WMS Industries Inc, 800 S Northpoint Bloulevard in Waukegan. | Michael Schmidt~Sun-Times Media
Updated: April 2, 2013 2:06AM
Odds are that the biggest casino bet Thursday occurred far away from any gambling floor.
In a move into electronic slot machines, Scientific Games Corp. agreed to buy Waukegan-based WMS Industries Inc., for $1.42 billion. The sale values the company at $26 a share, a 59 percent premium over where the stock finished trading Wednesday.
The deal, which requires the approval of WMS shareholders, marks a new chapter for a company founded in Chicago in 1943. WMS is remembered for its Williams pinball games, popular in the 1970s and the ’80s when the quarter-gobbling machines were all the rage in taverns.
As pinball declined, WMS applied its electronic and game-design savvy to casino games, where it is the second-largest supplier. Scientific Games, headquartered in New York City, specializes in lottery tickets and machines.
John Miller, senior vice president at Ariel Investments, pronounced the sale a “great deal” for shareholders. He has incentive to be positive.
Miller said Ariel increased its investment in WMS during the fourth quarter of 2012 because it identified the company as a takeover target. “WMS was just out of favor, yet it was generating a significant amount of free cash flow,” Miller said.
He said Ariel now owns about 8 percent of its shares. Other large shareholders, according to regulatory filings, include mutual fund firms Janus Capital Management, at 8.9 percent, and T. Rowe Price, at 8.7 percent.
Other winners in the sale include seven WMS executives who collectively got stock option grants for about 130,000 shares in December, when the stock was worth $16.52 a share. It closed Thursday at $24.75, up $8.38 from Wednesday, or 51 percent.
The one-day jump made those 130,000 shares worth an extra $1 million on paper, although the option grants require the executives to hold the shares in phases until September 2016.
WMS’ corporate headquarters is at 800 S. Northpoint Blvd., in Waukegan and it operates a technology center at 3401 N. California in Chicago.
The company had no immediate comment on possible job losses from consolidation, but Miller said layoffs should be minimal as the companies’ businesses have little overlap.