Filed by GTECH Holdings Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Interlott Technologies, Inc.
Exchange Act File Number of Subject Company: 001-12986
55 Technology Way o West Greenwich, Rhode Island 02817 USA o
Telephone: 401 392-1000 o Fax: 401 392-1234 o Website: WWW.GTECH.COM
For Immediate Release Contact: Robert K. Vincent
March 17, 2003 Public Affairs
GTECH Corporation
401-392-7452
GTECH TO ACQUIRE INTERLOTT TECHNOLOGIES, INC.
Acquisition of Leading Instant Ticket Vending Machine Provider to
Support Company's Growth Strategy and
Strengthen Market Position in the Lottery Industry
WEST GREENWICH, RI - (March 17, 2003) - GTECH Holdings Corporation (NYSE: GTK)
today announced that it has entered into an agreement to acquire Ohio-based
Interlott Technologies, Inc. (AMEX: ILI), a leading provider of instant ticket
vending machines (ITVMs) for the lottery industry worldwide. The agreement calls
for GTECH to pay $9.00 per share for Interlott. Including estimated assumed debt
of approximately $21 million, the transaction would have a total value of
approximately $85 million. The transaction, which is subject to the approval of
Interlott shareholders, regulatory approvals, and certain other closing
conditions, is expected to be completed by late July 2003. Approval of GTECH
shareholders is not required.
"The acquisition of Interlott is part of GTECH's strategy for growing the
Company's core lottery business while creating sustainable long-term shareholder
value," said GTECH President and CEO W. Bruce Turner. "It will expand GTECH's
presence in the instant ticket distribution segment which will afford GTECH a
comprehensive set of solution offerings along the entire lottery industry value
chain."
"Interlott has had 32 consecutive quarters of sustained profitability and has
been able to achieve significant market share. It is our intent to build on what
has been created as a platform from which the synergies of the combined entities
can achieve even higher returns," continued Mr. Turner. "We are entering into
this transaction in firm view of the mutual benefits to Interlott and GTECH to
combine our knowledge and resources to drive even higher growth."
"In addition, we will be able to optimize the game mix for instant tickets,
deliver broader access to lottery products for consumers, and, over time, add a
wider range of capabilities and services for our customers and retailers," said
Mr. Turner.
The acquisition of Interlott gives GTECH the ability to provide customers with a
comprehensive self-service solution for instant ticket distribution, and allows
the Company to leverage its core competencies in lottery automation, logistics
optimization, sales and marketing, and other operational areas.
Initially, the combined entities will benefit from significant efficiencies that
will be derived from the realignment and integration of certain Interlott
functions and the leveraging of GTECH's worldwide sales and government relations
infrastructure. Over time, the revenue growth potential is substantial as
Interlott's product offerings are combined into GTECH's offerings.
"The synergies gained by this integration into GTECH will accelerate the
combined companies' ability to compete successfully in future lottery contract
procurements," said Interlott President and CEO David F. Nichols.
Currently, 39 jurisdictions in the United States and 72 international
jurisdictions sell instant tickets. To date, Interlott has supplied more than
30,000 ITVMs and related products to 28 domestic and 14 international lottery
jurisdictions. GTECH plans to leverage its significant presence around the world
to pursue additional sales opportunities among the jurisdictions that have not
yet deployed ITVMs, many of whom are already GTECH customers.
Interlott will operate as a subsidiary of GTECH and maintain its brand identity.
An integration plan has been developed in order to assure customers of
uninterrupted services and a seamless transition.
Based in Mason, Ohio, Interlott currently employs approximately 230 people. In
addition to supplying dispensing machines to the lottery industry, Interlott
also supplies phone card dispensing machines to the telecommunications industry.
Interlott's revenues for the fiscal year ended December 31, 2002, were a record
$52 million, up 21.7 percent from $42.7 million in 2001.
Based on a projected closing date of late July, GTECH expects that Interlott
will provide a revenue contribution of $33 to $38 million, with earnings per
diluted share in the range of $0.03 to $0.04 in fiscal year 2004. GTECH expects
earnings contributions from Interlott to improve in future years as the Company
realizes the planned cost and revenue synergies.
Terms of Acquisition
--------------------
Interlott shareholders will have the ability to elect to receive either $9.00 in
cash, or a number of GTECH shares having a value of $9.00 based upon GTECH's
stock price before the closing, or a combination of both, subject to a pro rata
adjustment so that the aggregate consideration paid by GTECH will be 51.5
percent in stock and 48.5 percent in cash. At $9.00 per share, Interlott's
common equity, including options, is valued at approximately $64 million. In
addition to other customary closing conditions, one of the conditions to GTECH's
obligation to complete the merger is that the average price of GTECH's common
stock not fall below a certain level during a period before the closing. If that
happens, however, Interlott will have the ability to complete the merger as an
all-cash transaction instead, if the other conditions are satisfied.
The board of directors of Interlott, together with a special committee of the
board appointed to represent the interest of public shareholders, have each
unanimously approved the transaction, and the majority shareholder of Interlott
has agreed to vote his shares in favor of the transaction. The transaction has
been structured as a reorganization that will be tax free to Interlott
shareholders to the extent they receive GTECH stock.
Webcast and Conference Call Information
---------------------------------------
GTECH will host a conference call for analysts and investors today 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 612-288-0337.
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 678197, beginning at
noon today through midnight on March 18, 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 Interlott and to achieve efficiencies from that integration, (ii)
the approval of the merger by Interlott 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 Interlott are engaged or expects to be engaged, (iv) the future
operating and financial performance of GTECH and Interlott (including, without
limitation, expected future growth in revenues, profit margins and earnings per
share), and (v) the ability of GTECH and Interlott 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 Interlott's subsequent press releases and on Reports by
GTECH and Interlott 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
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.
ooo
GTECH, a leading global information technology company with $1 billion in
revenues and 4,300 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.
-000-
GTECH and Interlott will file a proxy statement/prospectus and other documents
regarding the proposed acquisition described in this press release with the
Securities and Exchange Commission. INVESTORS AND SECURITYHOLDERS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION ABOUT GTECH, INTERLOTT AND THE PROPOSED
TRANSACTION. A definitive proxy statement/prospectus will be sent to holders of
Interlott common stock seeking their approval of the transaction. Investors and
securityholders may obtain a free copy of the definitive proxy
statement/prospectus (when it becomes available) and other documents filed by
GTECH and Interlott with the SEC at the SEC's web site at www.sec.gov. The
definitive proxy statement/prospectus and other documents may also be obtained
for free by directing a request to:
GTECH Holdings Corporation
55 Technology Way
West Greenwich, RI 02817
Attn: Investor Relations
Tel: (401) 392-6980
and
Interlott Technologies, Inc.
7697 Innovation Way
Mason, OH 45040
Attn: Dennis Blazer, CFO
Tel: (513) 701-7000
GTECH, Interlott, and their respective directors, executive officers, and
certain members of management and other employees may be deemed to be
participants in the solicitation of proxies of Interlott shareholders to approve
the proposed merger. Such individuals may have interests in the merger,
including as a result of owning shares or options to purchase Interlott common
stock. A detailed list of the names, affiliations and interests of the
participants in the solicitation will be contained in the proxy
statement/prospectus that will be filed with the SEC.