Interview GTECH - RENATO ASCOLI


In July of this year, GTECH and IGT made the blockbuster announcement of their intent to merge. The deal, worth around $6.4 billion, is now being finalised, and is expected to be complete by mid-2015. So how did this marriage come about, and what will the new entity look like? G3 spoke with Renato Ascoli, GTECH President of Products and Services and General Manager, to find out.


Why did GTECH acquire IGT?


The merger transforms us into an end-to-end gaming company with the ability to serve clients across the full gaming spectrum. Once we come together, we will be a leader in all major gaming market segments – lottery, gaming machines, interactive, sports betting, and social gaming. The combination will create an unparalleled offering and a complete portfolio of products and servic- es for our customers.


Our businesses are highly complementary. GTECH pro- vides industry leading lottery solutions, instant ticket printing, and operation and management capabilities. This is demonstrated in our leadership in the Italian gaming market, as well as in other jurisdictions where we operate lotteries on behalf of governments around the world.


We’ve developed a comprehensive interactive gaming platform that supports poker, bingo and casino games, as well as sports betting products. Through our Spielo product brand, we have become the leader in the manu- facture and supply of video lottery systems and gaming machines in distributed gaming networks.


Content is a significant driver of the success of any gam- ing program. With the foundation of IGT’s industry- leading portfolio, we will have a library of games that will surpass any other company in the industry. That’s critically important as we look to enhance the distribu- tion of popular titles to new platforms and channels.


In terms of commercial casino gaming equipment, IGT is the leading manufacturer of slot machines. This will give GTECH the ability to manufacture VLTs and other gam- ing equipment more efficiently.


In the social gaming space, IGT’s DoubleDown solution is leading the way in monetising online play and expanding the player base to attract a new demographic of players. It is also a very good way to test games for deployment in other channels and venues.


All in all, the offerings of the combined companies pro- vide best-in-class solutions to address the needs of players and customers across the entire spectrum of gaming activities.


What are the biggest challenges that you face in bringing together IGT and GTECH and how are you managing the processes?


Merger activity naturally comes with its share of chal- lenges, as well as opportunities. We must remain vigi- lant in ensuring that our customers know we are focused on them. Our top priority is to keep the empha- sis on the customer.


We are in the early stages of the planning process. We have formed a Steering Committee of senior leaders from both GTECH and IGT, which will be responsible for overseeing and guiding the integration planning.


GTECH’s integration track record proves our ability to navigate successfully through this process. We recog- nize that it is hard work, but we have consistently pro- duced substantial results in previous acquisitions and their resulting integrations. Beginning with Lottomatica’s acquisition of GTECH, and then Spielo and Atronic, each has improved our capabilities to manage the process of integrating products and content in order to provide our customers with a best-in-class offering.


What has been the reaction of your customers to the announcement? What will be the real benefits to the customer of this merger?


Our customers are enthusiastic about the merger. They clearly recognise how this will help their operations. We have emphasised that they will remain our focus during the transaction.


We expect to see enhanced


innovation. We will have the kind of scale that can make a real difference in providing


customers with powerful and


innovative revenue-generating gaming products, driven by our industry-leading R&D efforts.


Once the merger is completed, they’ll have access to best-in-class content, because we’ll have a library of games that will far surpass any other company in the industry. In addition, our customers will be uniquely positioned to leverage the opportunities created by ongoing convergence across all gaming channels – including online, landbased, and mobile.


We expect to see enhanced innovation. We will have the kind of scale that can make a real difference in pro- viding customers with powerful and innovative rev- enue-generating gaming products, driven by our indus- try-leading R&D efforts.


We will also have the ability to manufacture gaming machines and other gaming equipment more efficiently. Both companies also have long histories and extensive capabilities in systems; this transaction will build up our systems offering.


In the social gaming space, DoubleDown will help cus- tomers to monetise play in the interactive space, and expand the player base.


Most importantly, we will continue to make customer service our top priority. Meeting our customers’ needs will always be GTECH’s main objective, now and on an ongoing basis after the merger.


Cost savings will be made, but how far reaching


will they be, and what areas will be the most/least affected?


There will be efficiencies as a natural consequence of the merger. However, because our businesses are com- plementary, we see very little overlap in the business- related segments, such as R&D and the game develop- ment studios. The major synergies will come from non- business-related areas, such as support functions.


How long will it take GTECH and IGT to effectively merge together?


This is challenging to predict at this stage in the process. Due to the scope of this transaction, we believe it will take some time. Once the transaction closes, we want to deliver the benefits to our customers as soon as we can, but we must also take the time required to do it right. This is why the work of the integration Steering Committee, and its planning process, is so important.


Will we continue to see the same level of choice, of diversity of product and innovation with the merg- er of these two businesses?


At the end of the day, our customers are seeking top- performing products suited to their players and their markets. A diverse product line is essential to ensuring great performance in each unique market. Because each company’s respective areas of strength are complemen- tary, we expect to provide our customers with a wealth of choice, including the largest and best-performing game library in the industry.


What will happen to each of the individual divi- sions within IGT and GTECH? DoubleDown, IGT Interactive, SPIELO Gaming, Systems and Interactive, for example - will all these brands be merged or kept as separate entities? What will happen to these brands - and will ‘IGT’ continue to be a brand going forward?


Both companies have gone through a re-branding process relatively recently. Each has significant brand equity. A review will be conducted to determine how best to capture that brand equity, both in terms of the company identity and the product brands. We’ll announce the outcome of that process after the transac- tion has closed.


Why is ‘consolidation and scale’ such an important and driving factor in the gaming business in 2014?


Customers are seeking growth beyond their traditional gaming programs. They recognise that to grow their player base, they need to expand their offerings and provide them on the channels players are seeking, whether it’s land-based, interactive, or mobile. Suppliers are recognising that multi-channel offerings are critical to their success.


For GTECH, this merger is about more than expanding our scale. We believe that the combined entity will be in the best position to respond to our customers’ needs today and in the future — where content is truly the driver of performance, and where players are seeking the most entertaining games anytime, anywhere, on any device.


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