WMS Acquisition by Scientific Games Ignores MGT Lawsuit, Threatens Closing
As announced today, Scientific Games (SGMS) agreed to buy slot machine manufacturer WMS Industries (WMS) for about $1.5 billion. However, nowhere in this story did they make mention of a giant elephant in the room: WMS is the primary defendant in a huge, pending lawsuit. Well over 25% of WMS' revenue comes from group play slot machines- the exact slot machines that are the target of a lawsuit being funded by MGT Capital.
Note that this lawsuit also includes historical damages, trebled, and ongoing royalties and/or injunctions. There is a massive amount of money at stake here. If WMS loses, Scientific Games could be drawn into liability if they acquire the company. Likewise, Scientific Games might suddenly discover this lawsuit and decide that they don't want WMS after all. Or any other number of complications.
This is a big deal, and a huge positive for MGT Capital. It validates (with a real takeover offer) the value of group play slot machines. WMS has succeeded with group play slot machines, and they have allegedly done so by infringing upon MGT's patents. They will have to pay, and now they're going to have to go to the confessional with Scientific Games. In any case, this announcement simply means more money for MGT and more exposure for this overlooked lawsuit.
MGT another massive hat in the market where scientific games agreed to acquire for their casino slot machines from WMS for round about $1.5 billion as everyone is aware that WMS is facing a crucial law suit already for breaching a contract. Now the MGT is going to finance this massive acquisition transaction not for their selves but for WMS which will finally be in favor of none other than MGT. Now here the problem for Scientific Games is that if WMS lost the case who will be responsible for the historical damages, or royalties or even injunction, of course scientific games, this is called pulling into cave, which done MGT.
The triangular shape of the case might be finally miserable for scientific games as because WMS in under the pressure of MGT where to pay and how to pay, that’s why the finance their dealing by MGT and now they will willfully adopting nothing else breaching the contract, and MGT would wish to do so, and the situation is clear that the same will happen. If happened so scientific games would came under a massive pressure of answering what to do…..because payment or settling the deal would be upon their shoulder. But if not happened then WMS would pay to MGT. Here it is clear the ball is in MGT court where they kick it, time will decide but looks that scientific games are under devastating stones.
Here credit may be given to the gigantic investment policy of MGT whereby on one side they are ensuring their credit to be safe and on the other hand they secure the uncertain future by taking the advantage of putting the giant of the market in close conflict. Wise management incredible job they have done every one would finger in between the upper and lower teeth. Its an amazing achievement MGT in both the cases the company would be in benefit and leading position. So on the closing remarks one could say none other that MGT you rock…..and …….hawk.
This is a huge negaitve for MGT. ScientificGames,who is in the slot machine business, would be far more knowledgeable about industry news. Their team of lawyers have investigated and decided that, the "lawsuit" does not have as much merit as MGT would like others to believe. They feel that whatever is decided, is worth the 55% premium they have offered to purchase 100% of the outstanding shares.