Peter Smith (Palm Harbour Capital) on International Gaming Technology (IGT)

Peter Smith (Palm Harbour Capital) on International Gaming Technology (IGT)

In this episode, I talk with Peter Smith of Palm Harbour Capital. Peter shares his background and then dives deeply into International Gaming Technologies (ITG).

In a nutshell, IGT is interesting because it has agreed to sell its Gaming & Digital business to Apollo. IGT will receive ~$3.6BN of net proceeds, when the transaction closes and the Remaining Lottery business is trading at 5x EBITDA on a pro forma basis (peers trade in the high single digit range). What’s the catch? ITG has a large Italian lottery contract up for renewal in Q2 2025 which investors are worried about.

1:45 – Peter shares his background and how a Texas native ended up in London

3:30 – Palm Harbour overview

4:30 – Peter’s experience backpacking around Europe

4:50 – How Peter landed his first job in Germany

6:45 – How Peter thinks about portfolio construction

8:45 – Why Peter thinks ex-US markets are less competitive

10:30 – Peter’s approach to spin-offs

12:00 – Peter provides an overview of International Game Technology (IGT)

13:45 – Apollo is buying the slot machine side of the business

15:45 – History of IGT’s lottery business

16:00 – Economic resilience of the lottery business

20:00 – Why IGT launched a strategic review

21:30 – Why the market did not like the initial spin-off proposal

23:30 – Overview of Italian lottery renewal

27:30 – Why is the market concerned about the Italian lottery renewal?

35:45 – Why is IGT likely to win the Italian renewal?

40:35 – How important is this contract for IGT?

44:35 – How do you think about IGT’s valuation in a scenario where it loses the Italian contract?

46:45 – What odds is the market implying that IGT is going to lose this contract?

48:10 – How much of Apollo’s $4.05BN bid will be lost to expenses and taxes?

50:20 – How do you view IGT’s management team?

52:05 – Would the RemainCo ever get sold?

54:10 – What is timing of Italian renewal and the Apollo transaction closing?

1:00 – Where you can go to learn more about Peter Smith and Palm Harbour Capital

You can learn more about Palm Harbour Captal here. You can connect with Peter on LinkedIn here.

You can watch our conversation on YouTube here.

Or you can listen on Spotify here or on Apple here.