ITEM
1.01
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On
January 10, 2006, GTECH Holdings Corporation (the “Company”) entered into
an agreement and plan of merger (the “Merger Agreement”) with Lottomatica
S.p.A., an Italian corporation (“Lottomatica”), Gold Holding Co., a
Delaware corporation and direct, wholly owned subsidiary of Lottomatica
(“Parent”), and Gold Acquisition Corp., a Delaware corporation and
direct, wholly owned subsidiary of Parent (“Acquisition Co”), whereby
Acquisition Co will merge with and into the Company (the “Merger”), with
the Company as the surviving corporation. At the effective time of the
Merger,
each outstanding share of Company common stock (other than shares owned
by the
Company, Lottomatica or their respective subsidiaries that will be canceled
and
by holders who vote against the Merger and properly elect to exercise appraisal
rights under Delaware law) will be converted into the right to receive
U.S.
$35.00 in cash.
The
Merger Agreement includes customary representations, warranties and covenants
by
the respective parties. Consummation of the Merger is subject to receipt
of
financing, the affirmative vote of holders of a majority of the outstanding
shares of the Company, the expiration or termination of any waiting period
(and
any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements
Act of
1976, as amended, and the merger control regulation of the European Union,
Lottomatica maintaining a pro forma investment grade credit rating, and
other
customary closing conditions.
In
addition, the consummation of the Merger is subject to:
(a)
Receipt of consents expressly required for a change in control under the
Company’s Georgia, Illinois, New York and Rhode Island lottery
contracts.
(b)
Receipt of reasonably satisfactory oral or written confirmation that the
consummation of the Merger will not result in the termination of, or the
commencement of formal termination procedures in respect of, specified
material
lottery contracts representing at least 87.5% of the aggregate revenues
pursuant
to all such specified lottery contracts over the 12 month period ending
November
30, 2005. The specified lottery contracts are: Texas, California, Florida,
Michigan, Missouri, New Jersey, Ohio, Wisconsin and the United Kingdom. The
failure to receive confirmation with respect to any of the Texas, California
and
United Kingdom contracts will cause this condition not to be
satisfied.
(c)
No
termination of, and no commencement or receipt of written notice of commencement
of formal termination procedures (except to the extent withdrawn or terminated)
in respect of (i) any of the lottery contracts specified in clause (a)
above and
(ii) lottery contracts specified in clause (b) above representing at least
90%
of the aggregate revenues pursuant to all such lottery contracts over the
12
month period ending November 30, 2005. The termination of, or commencement
or
receipt of written notice of commencement of formal termination procedures
(except to the extent withdrawn or terminated) in respect of, any of the
Texas,
California, United Kingdom and Michigan contracts (as well as any of the
contracts specified in clause (a) above) will cause this condition not
to be
satisfied.
Lottomatica
will fund the transaction through available cash; a rights issue, expected
to be
voted upon by Lottomatica shareholders in April 2006 and launched in May
2006
(the “Rights Issue”); an issue of nonconvertible subordinated securities
expected to be issued in May 2006; and the proceeds of a senior loan, to
be
extended to Acquisition Co, which loan will be guaranteed by Lottomatica.
Credit
Suisse and Goldman Sachs have agreed to underwrite Lottomatica’s rights issue
and subordinated securities and have committed to provide the senior loan
financing. The financings and related underwritings and commitments are
subject
to Lottomatica maintaining a pro forma investment grade credit rating and
other
customary conditions.
The
Merger Agreement contains certain termination rights for the Company and
Parent
and further provides that, upon termination of the Merger Agreement under
specified circumstances, either party may be required to pay a termination
fee.
In the event a termination fee is payable by Parent to the Company, it
will
equal $50,000,000. In the event a termination fee is payable by the Company
to
Parent, it will equal $163,000,000.
(B)
DE
AGOSTINI AGREEMENT
Concurrently
with the Merger Agreement, on January 10, 2006, the Company entered into
an
agreement
(the “De Agostini Agreement”) with De Agostini S.p.A., the majority
shareholder of Lottomatica (“De Agostini”), pursuant to which De Agostini
has agreed, subject to certain conditions, to vote in favor of the Rights
Issue
and to exercise its full, direct and indirect, pro-rata share of such
Rights
Issue.
(C)
AMENDMENTS TO ATRONIC AGREEMENTS
Immediately
prior to the execution of the Merger Agreement, on January 10, 2006, GTECH
Corporation, a wholly owned subsidiary of the Company, entered into (a)
an
amendment (the “Master Agreement Amendment”) to the Master Agreement
dated December 5, 2004, among Paul Gauselmann, Michael Gauselmann and GTECH
Corporation (the “Master Agreement”) and (b) an amendment (together with
the Master Agreement Amendment, the “Atronic Amendments”) to the Purchase
Agreement dated December 5, 2004, among Paul Gauselmann, Michael Gauselmann
and
GTECH Corporation (the “Atronic Purchase Agreement”, together with the
Master Agreement, the “Atronic Agreements”)). The Atronic Amendments
amend the Atronic Agreements to, among other things, provide that: (a)
GTECH
Corporation will guarantee an additional Euro 20 million in debt of Atronic
International GmbH; and (b) if the Merger is consummated, (i) the outside
date
for closing of the transactions contemplated by the Atronic Agreements
(the
“Atronics Transactions”) will be extended from December 29, 2006 to
December 29, 2007, (ii) the minimum purchase price payable by GTECH Corporation
will be increased from zero to Euro 20 million, (iii) the break-up fee
payable
by GTECH Corporation as specified in the Atronic Purchase Agreement will
be
increased from Euro 15 million to Euro 20 million, and (iv) GTECH Corporation
will pay Euro 5 million on each of July 1, 2007 and October 1, 2007 in
the event
that the closing of the Atronics Transactions has not occurred by such
dates.
The
foregoing descriptions of the Merger Agreement, the De Agostini Agreement
and
the Atronic Amendments are qualified in their entirety by reference to
the full
text of the Merger Agreement, the De Agostini Agreement and the Atronic
Amendments, copies of which are attached hereto as exhibits 2.1, 10.1,
10.2 and
10.3.
ADDITIONAL
INFORMATION
This
communication is not a solicitation of a proxy from any security holder
of the
Company. The Company intends to file with the Securities and Exchange Commission
(“SEC”) a proxy statement and other relevant documents to be mailed to
security holders in connection with the proposed transaction. WE URGE INVESTORS
TO CAREFULLY READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS
WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE
COMPANY AND THE PROPOSED TRANSACTION. A definitive proxy statement will
be sent
to security holders of the Company seeking approval of the proposed transaction.
Investors will be able to obtain these materials (when they are available)
and
other documents filed with the SEC free of charge at the SEC's website,
www.sec.gov. In addition, a copy of the proxy statement (when it becomes
available) may be obtained free of charge from GTECH Holdings Corporation,
55
Technology Way, West Greenwich, Rhode Island 02817, Attention: Investor
Relations Director, Telephone: 401-392-1000, or from the Company’s website,
http://www.gtech.com/.
This
communication shall not constitute an offer to sell or the solicitation
of an
offer to buy any securities in the United States or in any state thereof
of in
any other jurisdiction. No offering of securities shall be made except
by means
of a prospectus meeting the requirements of Section 10 of the Securities
Act of
1933, as amended. (the “Securities Act”) (a “Prospectus”) or an
exemption from registration. The securities of Lottomatica may not be offered
or
sold in the United States or to or for the account or benefit of U.S. persons
(as such term is defined in Regulation S under the Securities Act) except
by
means of a Prospectus or an exemption from registration. Lottomatica securities
have not been, and will not be, registered under the Securities Act or
offered
to the public in the United States.
PARTICIPANTS
IN SOLICITATION
The
Company and its officers, directors and certain other employees may be
soliciting proxies from shareholders of the Company in favor of the proposed
transaction and may be deemed to be participants in the solicitation of
proxies
in respect of the proposed transaction. Information regarding the Company’s
directors and executive officers is available in the proxy statement filed
with
the SEC by the Company on June 24, 2005. Other information regarding the
direct
or indirect interests, by security holdings or otherwise, of the participants
in
the proxy solicitation will be set forth in the proxy statement and other
relevant materials to be filed with the SEC when they become
available.
FORWARD-LOOKING
STATEMENTS
Statements
about the expected timing, completion, and effects of the proposed transaction
and all other statements in this document, other than historical facts,
constitute forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Readers
are
cautioned not to place undue reliance on these forward-looking statements
and
any such forward-looking statements are qualified in their entirety by
reference
to the following cautionary statements. All forwardlooking statements speak
only
as of the date hereof and are based on current expectations and involve
a number
of assumptions, risks, and uncertainties that could cause the actual results
to
differ materially from such forward-looking statements. The Company and
Lottomatica may not be able to complete the proposed transaction on the
terms
described above, on other acceptable terms, or at all because of a number
of
factors, including the failure to obtain shareholder approval, the failure
of
Lottomatica to obtain financing, the failure to receive required assurances
from
certain significant lottery customers, Lottomatica maintaining a pro forma
investment grade credit rating, or the failure to satisfy the other closing
conditions. These factors, and other factors that may affect the business
or
financial results of the Company, are described in the Company’s filings with
the SEC, including Items 1 and 7 of the Company’s annual report on Form 10-K for
the fiscal year ended February 26, 2005. The Company does not undertake
any
obligation to update its forward-looking statements to reflect events or
circumstances after the date of this document.
ITEM
8.01
OTHER EVENTS