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Will Light & Wonder (LNW) Benefit From Likely SciPlay Merger?

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Light & Wonder, Inc. (LNW - Free Report) recently inked a definitive agreement with SciPlay Corporation to acquire the remaining 17% ownership stake in the latter for $22.95 per share. The all-cash transaction is likely to be completed by fourth-quarter 2023, subject to the fulfillment of mandatory closing conditions and other regulatory approvals.

SciPlay previously operated as the Social division within the global gaming leader Scientific Games (the erstwhile name of Light & Wonder) and became an independent company in 2019. It operated as a subsidiary of Light & Wonder, with the parent company holding the majority interests in it.

SciPlay is a leading developer and publisher of digital games on mobile and web platforms, including Jackpot Party Casino, Gold Fish Casino, Hot ShotCasino and Quick Hit Slots, MONOPOLY Slots, Bingo Showdown and 88 Fortunes Slots. It generates revenues from the sale of virtual coins, chips and bingo cards, which players can use to play slot games, table games and bingo games. SciPlay combines a data-driven approach and advanced game economy with high-quality content to create a thrilling mobile gaming experience for users across the globe.

The merged entity is expected to help accelerate the cross-platform strategy and create a stronger and more efficient platform for growth with an optimum balance sheet position for greater financial flexibility. This, in turn, will likely help to invest more funds for developing and launching cross-platform games for enhanced shareholder returns.

Light & Wonder strives to be a leading cross-platform global games firm with a focus on content and digital markets. The company aims to create games and evergreen franchises that can be made available to players on any platform they want to play. It follows a holistic growth strategy and intends to extend its footprint in high-return markets and strategic adjacencies that generate strong long-term cash-based returns.

However, Light & Wonder had earlier called off a similar buyout proposition in December 2021 after it announced the sales of its Lottery and Sports Betting businesses for approximately $7 billion. Whether the current deal will indeed go through remains to be seen.

Other notable stocks within the broader industry are Model N, Inc. (MODN - Free Report) and Akamai Technologies, Inc. (AKAM - Free Report) . Model N has delivered an earnings surprise of 21.3% in the trailing four quarters.

San Mateo, CA-based Model N provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance. Model N has significant growth opportunities in the revenue management market, as it continues to replace legacy processes that were labor intensive, error prone, inflexible and costly.

Akamai delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It has a long-term earnings growth expectation of 10%.

Akamai is a global provider of content delivery network and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.

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