Light & Wonder Boosts Portfolio With Strategic Buyout: Stock to Gain?

Core Viewpoint - Light & Wonder, Inc. (LNW) has entered into a definitive agreement to acquire Grover Gaming's charitable gaming assets for $850 million in cash, with an additional potential earn-out of up to$200 million over four years, funded through a mix of debt financing and existing cash [1][2]. Company Summary - Grover Charitable Gaming operates approximately 10,000 leased electronic pull-tab units across five U.S. states, generating revenues of $135 million and adjusted EBITDA of$111 million in fiscal 2024 [3]. - The acquisition aligns with LNW's strategy to expand its footprint in high-return markets and is expected to be accretive to profitability, with anticipated high single-digit adjusted NPATA in the first full calendar year post-acquisition [5]. Industry Summary - The charitable gaming space is projected to grow significantly in the coming years, providing LNW with an opportunity to leverage Grover's strong customer relationships and market presence [4]. - LNW's holistic growth strategy focuses on extending its reach in digital markets and high-return sectors, which is reinforced by this acquisition [5]. Financial Outlook - LNW has reiterated its Consolidated AEBITDA target of $1.4 billion for 2025, supported by solid market traction across its businesses [2]. - The company expects to maintain a net debt leverage ratio within the target range of 2.5x to 3.5x following the acquisition [1]. Historical Context - Strategic acquisitions have been integral to LNW's growth, with previous acquisitions enhancing its capabilities in the global gaming industry [6]. - Notable past acquisitions include Bally Technologies and WMS Industries, which have expanded LNW's offerings in computerized systems and services [6]. Stock Performance - LNW's stock has increased by 20.2% over the past year, compared to the industry's growth of 23.9% [8].