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MGT Capital Investments, Inc. Message Board

  • investora2z investora2z May 10, 2013 8:07 AM Flag

    News flow expected today

    Yesterday's movement was in a tight range with good volumes. There are some expectations of news related to the WMS Industries (WMS) and Scientific Games (SGMS) merger. The merger is up for vote of WMS shareholders today, and it is possible that WMS may take a decision on the matter of settlement with MGT today. The SGMS shareholders, who had paid a 59% premium to the market price of WMS for acquisition, would definitely not like to take on a potentially dangerous contingent liability and also bear the cost of legal expenses related to the trial. A clarity on this will help understand how the future of the lawsuit will pan out. In case of a settlement, other defendants may follow suit or maybe the matter will go to trial. What is more important now is that MGT is a company with an operational stake in the Fantasy Sports business. Its acquisition of FanTD LLC recently marked its entry into the sports wagering and mobile / online gambling business. SA has published an article on this highlighting the potential of the acquisition. As per the article, the valuation of the acquisition is likely to double within 6-8 months. In addition, a stream of revenues would do a world of good to the balance sheet of the company. Analysts may look at the company differently as compared with companies who are solely dependent on the outcome of patent infringement lawsuits. Once regular inflows start, things start get easier, and depending upon the success of the venture, the valuation of MGT may change dramatically. Further, funding is easier in businesses where there are operating revenues. More clarity will emerge over the next few days on this also, but what is certain is that attempts are being made to balance the business model. The immediate future, however, depends mainly on the news flow related to the lawsuit / settlement.

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    • investora2z, it looks like SGMS shareholders/company execs let go of their concern of taking on a pending lawsuit with buyout of WMS, given that merger has taken place. Wondering if perhaps SGMS so values the gain from the WMS purchase that any future lawsuit repercussions will be made up for by this immediate buyout and increased revenues? Mainly, am writing to ask if you concur that if there was any settlement with WMS, we would have heard it about it by now and certainly before the merger took place. Or, do you believe a settlement has occurred and MGT is just slow to report it for some reason? Would appreciate your thoughts as I much appreciate any and all your posts on MGT, thanks in advance

      Sentiment: Strong Buy

      • 3 Replies to richkortsep
      • Thanks for the reply. I do not know about any settlement having taken place already. Speculation was that WMS may have to settle soon. About the merger, WMS shareholders were expected to agree as the price paid was great. Now, if SGMS has some issues before finalization of the merger, then WMS may be forced to do something about the lawsuit. Only time will tell.

      • The merger hasn't taken place yet. The deal is not expected to close until the end of 2013.

        All that has happened so far is that WMS shareholders have agreed to be purchased for $26 per share. There was no question that WMS would agree; $26 is a 50% premium to WMS price prior to the offer.

        SGMS can still back out of the deal if the Markman hearing is favorable to MGT.

      • The merger is scheduled to close by the end of the year. The only new news is that WMS shareholders approved the merger - meaning they are all for selling their company to SGMS for twice the value Wall Street priced them at if SGMS will have them. No surprise!

        The merger has not closed. It is still scheduled to be completed by YE 2013. The news on Friday moves us closer to a settlement as WMS will likely need to resolve this litigation before the deal closes and WMS shareholders want the deal to go through.

        Sentiment: Buy

    • Why would anyone thumbs down your comment? Everything you said sounds reasonable to me.

      Sentiment: Strong Buy

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