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Scientific Games To Acquire WMS

31 January 2013

NEW YORK, N.Y. -- (PRESS RELEASE) -- Scientific Games and WMS Industries today announced that the companies have entered into a definitive agreement under which Scientific Games has agreed to acquire WMS for $26.00 in cash per common share or approximately $1.5 billion.

The transaction, which was unanimously approved by both the Scientific Games and WMS Boards of Directors, combines two leading companies in the gaming industry to create an organization that will supply an extensive range of products and services to public and private sector lottery and gaming customers throughout the world. Scientific Games is a leader in the supply of lottery instant tickets, lottery and video gaming systems and server-based gaming. WMS is a leader in the supply of gaming machines and interactive gaming content.

"The acquisition of WMS is transformational for Scientific Games, enabling us to offer a complete portfolio of lottery and gaming products and services to both new and existing customers around the world," said A. Lorne Weil, Scientific Games' Chairman and Chief Executive Officer. "We expect to combine our game content, technology, operational capabilities and respective geographic footprints to create an enterprise poised to capitalize on significant growth opportunities around the globe."

"This combination will diversify Scientific Games' revenue base, expand margins and propel future growth opportunities. Importantly, as we realize efficiencies from our increased size and scope, we should be able to deliver meaningful value to shareholders through the deal's immediate earnings per share accretion, significantly improved free cash flow and anticipated synergies," said Jeffrey S. Lipkin, Scientific Games' Chief Financial Officer.

"The combination of Scientific Games and WMS yields tremendous benefits to our customers, shareholders and employees," said Brian R. Gamache, WMS' Chairman and Chief Executive Officer. "We view this transaction as the next logical and strategic step in offering continued innovation in gaming. Shareholders will enjoy a meaningful premium for their shares and employees will have expanded career opportunities as part of a larger, broader and more diverse organization. We are delighted with this transaction and look forward to working with our new colleagues at Scientific Games."

Improved Operating Efficiencies
Scientific Games expects to achieve synergies through revenue growth, shared costs and larger scale, as well as by monetizing its significant U.S. tax attributes. The combined company will also be able to efficiently utilize shared manufacturing, engineering, software, field maintenance and customer service to drive growth and cost savings.

Excluding anticipated synergies, the combined companies generated combined revenue of approximately $1.6 billion and Combined Attributable EBITDA of approximately $579 million over the trailing 12-month period ended September 30, 2012.

Complementary Businesses Leveraging Core Competencies
Scientific Games and WMS will draw on each organization's core strengths to broaden offerings, bring gaming products to new sectors and geographies, accelerate key growth initiatives and offer enhanced capabilities, systems, field service and content. Scientific Games' strong global footprint, including its position in server-based gaming, should help accelerate WMS' international development initiatives. The addition of WMS' gaming business will also diversify Scientific Games' global business assets. Furthermore, Scientific Games and WMS are both known for their product innovation and creative content and will offer an expansive combined portfolio to customers. The combined company will be well positioned to capitalize on government sponsored gaming utilizing Scientific Games' established global platform and experience in providing lottery and gaming systems, products and services to governments.

Strengthened Position in Interactive Gaming
The combined iLottery/iGaming platform and content will significantly expand the scope of the combined company's interactive products. WMS has a well-developed iGaming platform, including social and mobile gaming, while Scientific Games has an advanced platform for iLottery, sports book and loyalty/rewards. Scientific Games expects significant opportunities to cross-sell these products to the companies' respective customers.

Transaction Terms and Execution
Scientific Games will acquire all of the outstanding shares of WMS for $26.00 per share in cash, for a total enterprise value of approximately $1.5 billion, including debt of $85 million and cash on hand of $55 million as of September 30, 2012. This consideration represents an EBITDA multiple of 6.0x WMS' Adjusted EBITDA of $246 million for the trailing 12-month period ended September 30, 2012, excluding synergies that Scientific Games expects to achieve.

The acquisition, which is subject to the approvals of WMS shareholders and gaming regulatory authorities and other customary closing conditions, is expected to be completed by the end of 2013. Scientific Games has obtained committed financing for the transaction and the transaction is not subject to a financing contingency.

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