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GTECH Holdings acquires Spielo for $150+ million

Price: $150+ million

PRESS RELEASE

GTECH Holdings Corporation to Acquire Spielo
Friday November 7, 8:09 am ET

Acquisition of Leading Video Lottery Solutions Provider to Support Company’s Growth Strategy and Advances Position in the Video Lottery Industry
WEST GREENWICH, R.I., Nov. 7 /CNW/ — GTECH Holdings Corporation (NYSE: GTK – News) today announced that it has entered into an agreement to acquire all of the shares of privately-held Spielo Manufacturing Inc., a leading provider of video lottery terminals (VLTs) and related products and services to the global gaming industry. The enterprise purchase price for Spielo is approximately US$150 million, payable in cash. In addition, in the 18 months following the closing, Spielo shareholders are entitled to receive an earn-out amount of up to US$35 million, based upon Spielo achieving certain VLT installation objectives in New York, giving the transaction a potential total enterprise value of up to US$185 million. The acquisition, which is contingent upon regulatory and gaming license approvals, and certain other closing conditions, is expected to be completed in the second quarter of GTECH’s fiscal year 2005. “As a world-class provider of video lottery solutions, Spielo has built a reputation of providing its clients with preference-driven products, outstanding customer service, and industry leading innovations,” said GTECH President and CEO W. Bruce Turner. “By acquiring Spielo, GTECH is better able to deliver a complete, integrated VLT solution to our customers and prospects, with a single point of contact and accountability.”

Spielo CEO Jon Manship commented, “Spielo’s acquisition by GTECH will afford the company the resources and access to new markets needed for it to grow to the next level of competitiveness. Of significant importance to me as the founder of the company, this deal will also help to secure our future and that of our workforce here in Canada.”

“We believe that the video lottery business is positioned for high growth in the foreseeable future, driven by a number of factors including the likelihood of a number of US jurisdictions approving expanded gaming, the demand for such technology in overseas markets, and the increasing role of content replacement,” continued Mr. Turner. “With Spielo, we are well- positioned to capture new business and grow market share by leveraging our leadership position in the lottery industry, our government relations experience, global presence, and our technological skills. We also gain a new source of revenue in a high-growth area of our core business. All of these factors will enable us to drive incremental, profitable, top-line growth for GTECH, and drive greater value for GTECH shareholders.”

Video lottery has been a key component to GTECH’s growth strategy in recent years. Since 2001, the Company has been awarded contracts to provide video lottery central systems and/or products and services to customers in Rhode Island, Oregon, Sweden, the Canadian provinces of Alberta and Saskatchewan, and, most recently, Trinidad & Tobago. Recent trends show an increasing number of jurisdictions that are considering video lottery are choosing the model adopted by Rhode Island, a model referred to throughout the video lottery industry as Participation Games. Under this type of contract, the manufacturer receives a percentage of the net win of a VLT, which is similar to the integrated services model for online lottery contracts, where the vendor supplies the capital and receives a percentage of dollars wagered on lottery tickets. This model plays directly to the core competencies of GTECH.

Today, GTECH enjoys more than 35 percent of the North American video lottery central system business. Spielo owns about 14 percent of the North American VLT business and maintains approximately 60 percent market share in Sweden. Recently, Spielo was one of four machine providers chosen to participate in New York, receiving nearly 25 percent of the total machines, or approximately 3,400 VLTs, to be installed at eight racetracks throughout the State. New York product installations are expected to begin this month.

When combining GTECH’s existing VLT Participation contracts in Rhode Island and Trinidad & Tobago with Spielo’s existing VLT Participation contracts in Rhode Island, Delaware, and New York, GTECH will have over 7,100 Participation-based VLTs in operation by December 31, 2005. This will make GTECH one of the largest global providers of Participation-based gaming machines.

“Spielo has grown along with the VLT business since its founding in 1990, and has built a very solid and successful niche specializing in this area of the business,” said Mr. Turner. “Besides having a well-deserved reputation for high-quality terminals and services, Spielo also brings to GTECH a large and well-regarded library of games with over 120 unique titles.”

The ability to leverage Spielo’s strengths in video lottery terminal design and game deployment will provide GTECH with an end-to-end terminal solution, and it will also equip the Company with a broader base of opportunities including terminal replacements and ongoing game royalties. In addition, it will give the Company the opportunity to continually provide content to lotteries in product sale environments, as well as potential future terminal deployments to the various jurisdictions considering VLTs.

Headquartered in Moncton, New Brunswick, Canada, Spielo currently employs approximately 400 people. Spielo’s revenues for its current fiscal year ended October 31, 2003 are expected to be approximately US$95 million, up from US$68 million in 2002. EBITDA for the year just ended is expected to be approximately US$29 million.

GTECH intends to maintain Spielo’s operations in Canada and its separate brand identity. An integration plan has already begun in order to assure customers of uninterrupted services and a seamless transition.

Based on a projected closing date of June 2004, GTECH expects that Spielo will provide a revenue contribution of US$70 million to US$75 million starting in the second quarter of fiscal year 2005. GTECH currently expects this transaction to be earnings neutral for fiscal year 2005. For the first 12 months of operation post-acquisition, GTECH expects the revenue contribution to be US$95 million to US$100 million, with an earnings contribution of US$0.01 to US$0.02 per share. GTECH expects earnings contributions from Spielo to improve in future years as the Company executes against its growth strategy and captures new growth opportunities.

Webcast and Conference Call Information

GTECH will host a conference call for analysts and investors today, November 7, 2003, at 8:30 a.m. (Eastern Standard Time). The call may be accessed in two ways. It will be broadcast live over the Internet. Go to GTECH’s website at www.gtech.com, click on “Investors,” then select “Live Broadcast.” Or, if you do not have Internet access, you may listen to this call by dialing 612-332-0932.

If you are unable to listen to this call live, it will be available on GTECH’s website under “Conference Calls” in the “Investors” section. Replay of the call will also be available by dialing 320-365-3844, access code 705359, beginning at noon today, November 7, 2003, through midnight on November 10, 2003 (Eastern Standard Time).

Certain statements contained in this press release are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, without limitation, statements relating to the companies’ merger and strategic plans, expectations and objectives for future operations, as well as the prospects and financial outlook for GTECH, each of which reflects management assumptions regarding: (i) the ability of GTECH to integrate successfully the operations of Spielo and to achieve efficiencies from that integration, (ii) the approval of the merger by Spielo shareholders and regulatory authorities and the ability of the parties to complete the merger, (iii) the future prospects for and stability of the lottery industry and other businesses in which GTECH and Spielo are engaged or expects to be engaged, (iv) the future operating and financial performance of GTECH and Spielo (including, without limitation, expected future growth in revenues, profit margins and earnings per share), and (v) the ability of GTECH and Spielo to retain existing business and to obtain and retain new business. Such forward looking statements reflect management’s assessment based on information currently available, but are not guarantees and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in the forward looking statements.

These risks and uncertainties include, but are not limited to, those set forth above, in GTECH’s and Spielo’s subsequent press releases and on reports by GTECH on Forms 10-K, 10-Q and 8-K, and other reports and filings with the Securities and Exchange Commission, as well as risks and uncertainties respecting: (i) the potential impact of extensive and evolving government regulations upon the companies’ businesses; (ii) the ability of the companies to continue to retain and extend its existing contracts and win new contracts; (iii) the possibility of slower than expected growth or declines in sales of online and VLT lottery goods and services by the companies or their customers; (iv) exposure to foreign currency fluctuations; (v) risks and uncertainties inherent in doing business in foreign jurisdictions; (vi) the relatively large percentage of the companies’ revenues attributable to a relatively small number of their customers; (vii) the fact that several of GTECH’s larger contracts are to be rebid in the near future; (viii) the possibility of significant fluctuation of quarterly operating results; (ix) the intensity of competition in the lottery industry; (x) the possibility of substantial penalties under and/or termination of the companies’ contracts; (xi) the ability of the companies to respond to technological change and to satisfy the future technological demands of its customers; (xii) opposition to expansion of lottery and gaming; (xiii) the companies’ ability to attract and retain key employees; and (xiv) the possibility of adverse determinations in pending legal proceedings.

GTECH, a leading global information technology company with $1 billion in revenues and 4,900 people in 43 countries, provides software, networks, and professional services that power high-performance, transaction processing solutions. The Company’s core market is the lottery industry, with a growing presence in financial services transaction processing. For more information about the Company, please visit GTECH’s website at http://www.gtech.com.

Contact:
Robert K. Vincent
Public Affairs
GTECH Corporation
401-392-7452

/Web site: http://www.gtech.com/

For further information

Robert K. Vincent, Public Affairs of GTECH Corporation, +1-401-392-7452

GTECH Holdings acquires Spielo for $150+ million Price: $150+ million PRESS RELEASE GTECH Holdings Corporation to Acquire Spielo Friday November 7, 8:09 am ET Acquisition of

GTECH awarded 10-year online gaming system, terminals, and integration contract from the national lottery of belgium

“This award is significant for GTECH as it allows us to build upon the existing relationship with the Belgian National Lottery which dates back to 1993 when we deployed the Lottery’s first gaming system,” said GTECH International President and CEO Walter Bugno. “Working together with the Lottery, we have created customer-focused innovations and new games, and, as a partner, we have gained a deep understanding of the Belgian marketplace as it exists today, and determined what the right path is for the future. GTECH looks forward to transitioning from the current contract to the new IT services model and upgrading the Lottery’s operating systems and its retailers with our latest product solutions and services that will create greater efficiencies and drive even higher sales growth.”

ROME, ITALY and PROVIDENCE, RHODE ISLAND (US) May 6, 2014 – GTECH S.p.A. announced that its subsidiary GTECH Global Services Corporation has been awarded a 10-year online gaming system, terminals, and integration contract to provide end-to-end services for the National Lottery of Belgium (NLB). The proposed contract, which is expected to commence in May 2014, follows a competitive, negotiated procurement process and is based on an IT services model. GTECH expects to receive approximately €125 million in revenues over the 10-year term.

“This award is significant for GTECH as it allows us to build upon the existing relationship with the Belgian National Lottery which dates back to 1993 when we deployed the Lottery’s first gaming system,” said GTECH International President and CEO Walter Bugno. “Working together with the Lottery, we have created customer-focused innovations and new games, and, as a partner, we have gained a deep understanding of the Belgian marketplace as it exists today, and determined what the right path is for the future. GTECH looks forward to transitioning from the current contract to the new IT services model and upgrading the Lottery’s operating systems and its retailers with our latest product solutions and services that will create greater efficiencies and drive even higher sales growth.”

The IT services model aims to drive services quality and to closely align GTECH’s services with the business requirements of the NLB. It calls for the set-up of integrated business tools, end-to-end processes based on IT industry standard practices (ITIL), and the establishment of a governance organization responsible for managing operations for the NLB.

“Time-to-market is extremely important in today’s business environment, and the same holds true for the lottery business. This Services arrangement with GTECH will allow us to introduce innovations more rapidly and be better prepared in the longer term to grow the business in a competitive marketplace. The business alignment through the governance model is key in this model and will allow us to translate new technology into innovative services for our players and to become a more attractive and socially responsible gaming provider,” said NLB’s ICT, Operations and Procurement Director Roger Malevé.

Under the terms of the award, GTECH will provide the NLB with best-in-class and secure gaming technology, performance driven services, and an integrated business environment. The Company will provide its Enterprise Series (ES) central system solution and replace the NLB’s existing terminal base with 5,550 Altura® GT1200 terminals. GTECH will also deploy mobile and handheld terminals as well as self-service ticket checkers.

The new contract will strengthen GTECH’s presence in Belgium and in Europe. The gaming operations and maintenance will be delivered from GTECH’s operations center in Warsaw, Poland. Ongoing services include the end-to-end operations and maintenance of the ES central system and retailer infrastructure, business tools operations, and other business related services such as project and bid management, quality management, and Enterprise security and architecture.

GTECH awarded 10-year online gaming system, terminals, and integration contract from the national lottery of belgium “This award is significant for GTECH as it allows us to build upon the