Boston, MA 06/13/2014 (wallstreetpr) – A Reuters report reveals that S&P Dow Jones would replace International Game Technology (NYSE:IGT) with Cimarex Energy Co (NYSE:XEC) in its S&P 500 index. The changes will be effective from June 20, 2014, according to the Dow Jones and will reflect the market capitalizations of the company.
Plans Of Sale
The news follows the early week development, where the slot machine maker is reported to be finding buyer for its business amid the broad industry consolidation and to counter the decelerating pace of growth. In this direction, the company has engaged the services of Morgan Stanley to advise and explore the options. Reuters cited people familiar with the matter that the company is involved in the plans of its sale for over two months and has sought attention from certain private equity firms and gaming companies.
Prudent Step
The bid for pursuing a buyer follows a disappointed show put up by the company’s stocks, which have so far lost over 31% of the value. The move is looked as a “prudent” one from the analyst, Michael Goltsman at Citigroup. Goltsman said that by looking at the valuation and PE ratio of International Game Technology (NYSE:IGT), the decision to seek a buyer appears to be a wise step. The research firm added that the company’s slot divisions are running under difficult times amid the sluggish growth in the industry and competition. While, Goltsman believe these factors to be cyclical, he sees IGT’s 10% free cash flow yield is good enough to lure private equity firms, but sees some regulatory hurdle though.
On the other hand, Credit Suisse analyst Joel Simkins and his team rule out the possibility of Bally Technologies Inc. (NYSE:BYI) to participate as a buyer. The research firm derives the point based on the leverage levels of Bally, its substantial overlap in some of the businesses and regulatory glitches. During the last year, Bally Technologies had acquired SHFL entertainment in a $1.3 billion deal.
