What Happened:
Shares of digital casino game developer SciPlay (NASDAQ:SCPL) jumped 15.3% in the morning session after the company announced that it has entered into an agreement under which Light & Wonder will acquire the remaining approximately 17% equity interest in SciPlay that it does not currently own for $22.95 per share. The stock closed at $19.65 the day prior, so the offer represents a nearly 17% premium. The transaction is expected to close during the fourth quarter of 2023, subject to customary closing conditions. Once finalized, SciPlay will be a wholly-owned subsidiary of Light & Wonder.
In addition, SciPlay reported second-quarter results that beat analysts' revenue and adjusted EBITDA expectations. Free cash flow also came in strong and well ahead of expectations. While the number of monthly paying users continued to grow, it came in roughly in line with Consensus. On the other hand, engagement metrics, including monthly active users and paying active users, fell below Consensus.
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What is the market telling us:
SciPlay's shares are not very volatile than the market average and over the last year have had only 6 moves greater than 5%. Moves this big are very rare for SciPlay and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move was three months ago, when the company gained 25.4% on the news that Light & Wonder proposed to buy out the remaining 17% stake in SciPlay that it does not already own for $20.00 per share in cash, valuing the deal at $422 million and the company at $2.1 billion. The offer implied a 28.5% premium over SciPlay's closing price on May 17, 2023. Light & Wonder added that "the deal would enable seamless collaboration with SciPlay and merge the balance sheets of both companies, giving more flexibility to invest cash where it can create the most value for shareholders."
SciPlay is up 42.9% since the beginning of the year. Investors who bought $1,000 worth of SciPlay's shares at the IPO in May 2019 would now be looking at an investment worth $1,490.
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