The Private Equity Division of Brookfield Asset Management, as well as Apollo Global Management, are both considering making a bid for the SG Lottery Unit of Scientific Games. Apollo Global Management is listed on the NYSE under the symbol APO whereas Scientific Games is listed on the NASDAQ under the symbol SGMS.

Bloomberg has reported that the company is in contact with private equity firms as regards the potential sale of the lottery unit of the company. However, there is not much clarity as regards the bids made by the private equity firms.

Why the interest?

The news has come to light after a slot machine manufacturer that is based in Las Vegas has pared the size of the Initial Public Offering (IPO) of SG Lottery. The IPO would be listed in Australia to $3 billion.

The company has not issued any official statement with respect to the business that provides the systems that are used to generate Power Ball Tickets as well as Mega Millions. However, the announcement could take place in the coming days.

The interest by Apollo Global Management is not surprising. The company, a private equity giant has made bids for various gaming assets since last year. The company was successful in its bids as regards the Venetian and Sands Convention Center that is located on the Las Vegas Strip. However, its efforts to acquire William Hill, the British sportsbook operator as well as its international operations have not met with any success.

The media as well as sports betting businesses of Tabcorp were also of interest to the private equity firm. However, Tabcorp decided to retain these two businesses and spin-off the lottery as well as Keno outfits.

Scientific Games has various options available that are appealing

As far as the divestment of the Lottery arm is concerned, the company has various options available to it. The arm could be listed in Australia due to investor enthusiasm as well as knowledge of the industry. This could increase valuation.

The business is profitable with strong cash flows. This means that the company operates from a position of strength as far as negotiations are concerned.