Item 1.01. Entry into a Material Definitive Agreement.
Equity Purchase Agreement
On September 27, 2021, Scientific Games Corporation, a Nevada corporation (the
"Company" or "Scientific Games"), Endeavor Operating Company, LLC, a Delaware
limited liability company ("Endeavor"), and, solely with respect to certain
sections of the definitive agreement, Endeavor Group Holdings, Inc., a Delaware
corporation ("Endeavor Holdings"), entered into an Equity Purchase Agreement
(the "Purchase Agreement"). Pursuant to the terms and subject to the conditions
set forth in the Purchase Agreement, Endeavor has agreed to acquire from
Scientific Games, and certain of its subsidiaries, all of the issued and
outstanding equity interests of the companies (the "Transaction") which together
constitute Scientific Games' Digital sports betting business (the "Sports
Betting Business").
The total consideration to be paid to Scientific Games in connection with the
Transaction is $1.2 billion on a cash-free, debt-free basis (the "Purchase
Price"), consisting of $1 billion in cash, subject to certain customary
adjustments as set forth in the Purchase Agreement, and 7,605,199 shares of
Class A common stock, par value $0.00001, of Endeavor Holdings.
The Purchase Agreement provides that completion of the Transaction is subject to
the satisfaction or waiver of customary closing conditions, including, among
other things, obtaining certain required regulatory approvals.
The Purchase Agreement contains customary representations, warranties and
covenants related to the Sports Betting Business and the Transaction. Between
the date of the Purchase Agreement and the completion of the Transaction,
subject to certain exceptions, Scientific Games agrees to, and to cause its
subsidiaries to, operate the Sports Betting Business in the ordinary course of
business in all material respects and to, among other things, use commercially
reasonable efforts to preserve substantially intact the business organizations,
retain current officers and preserve relationships with customers, suppliers,
employees and others.
The Purchase Agreement includes customary termination provisions for both
Scientific Games and Endeavor. Both Scientific Games and Endeavor will have the
right to terminate the Purchase Agreement if the closing has not occurred by
June 27, 2022, subject to a three month extension in the event that conditions
relating to regulatory approvals have not been satisfied as of that date.
The representations and warranties of Scientific Games, Endeavor and Endeavor
Holdings contained in the Purchase Agreement have been made solely for the
benefit of the parties to the Purchase Agreement. In addition, such
representations and warranties (a) have been made only for purposes of the
Purchase Agreement, (b) have been qualified by confidential disclosures made to
Endeavor and Endeavor Holdings in connection with the Purchase Agreement, (c)
are subject to materiality qualifications contained in the Purchase Agreement
which may differ from what may be viewed as material by investors, (d) were made
only as of the date of the Purchase Agreement or such other date as is specified
in the Purchase Agreement, (e) have been included in the Purchase Agreement for
the purpose of allocating risk between Scientific Games, Endeavor and Endeavor
Holdings rather than establishing matters as facts and (f) will not survive
consummation of the Transaction. Accordingly, the Purchase Agreement is included
with this filing only to provide investors with information regarding the terms
of the Purchase Agreement, and not to provide investors with any other factual
information regarding Scientific Games, Endeavor or Endeavor Holdings or their
respective subsidiaries or businesses. Investors should not rely on the
representations and warranties or any descriptions thereof as characterizations
of the actual state of facts or condition of Scientific Games, Endeavor or
Endeavor Holdings or any of their respective subsidiaries, affiliates or
businesses. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the Purchase
Agreement, which subsequent information may or may not be fully reflected in the
Scientific Games' public disclosures.
The foregoing description of the Purchase Agreement is not complete and is
qualified in its entirety by reference to the Purchase Agreement, which is filed
as Exhibit 2.1 hereto and is incorporated herein by reference.
Item 8.01. Other Events.
On September 27, 2021, Scientific Games issued a press release announcing it had
entered into the Purchase Agreement. A copy of the press release is attached as
Exhibit 99.1 hereto and is incorporated by reference herein.
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Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as "will," "may," and "should." These
statements are based upon Scientific Games' management's current expectations,
assumptions and estimates regarding the proposed Transaction between Scientific
Games and Endeavor, the expected benefits of the proposed Transaction, the
expected timing of completion of the proposed Transaction and anticipated future
financial and operating performance and results. Forward-looking statements are
not guarantees of timing, future results or performance. Therefore, you should
not rely on any of these forward-looking statements as predictions of future
events. Actual results may differ materially from those contemplated in these
statements due to a variety of risks, uncertainties and other factors, including
(i) the risk that the conditions to the closing of the proposed Transaction may
not be satisfied, (ii) the risk that a material adverse change, event or
occurrence may affect Scientific Games and Endeavor prior to the closing of the
proposed Transaction and may delay the proposed Transaction or cause the
companies to abandon the proposed Transaction, (iii) the possibility that the
proposed Transaction may involve unexpected costs, liabilities or delays, (iv)
the risk that the businesses of the companies may suffer as a result of
uncertainty surrounding the proposed Transaction and (v) the risk that
disruptions from the proposed Transaction will harm relationships with
customers, employees and suppliers or (vi) that Scientific Games may be unable
to achieve expected financial, operational and strategic benefits of the
proposed Transaction, and those factors described in Scientific Games' filings
with the Securities and Exchange Commission (the "SEC"), including Scientific
Games' current reports on Form 8-K, quarterly reports on Form 10-Q and its
latest annual report on Form 10-K filed with the SEC on March 1, 2021 (including
under the headings "Forward-Looking Statements" and "Risk Factors").
Forward-looking statements speak only as of the date they are made and, except
for Scientific Games' ongoing obligations under the U.S. federal securities
laws, Scientific Games undertakes no obligation to publicly update any
forward-looking statements whether as a result of new information, future events
or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
2.01 Equity Purchase Agreement, dated as of September 27, 2021, by and
among Scientific Games Corporation, Endeavor Operating Company, LLC
and Endeavor Group Holdings, Inc. (solely for the purposes set forth
therein) *
99.1 Press Release, dated September 27, 2021, issued by Scientific
Games Corporation
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document.
* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. The registrant agrees to furnish supplementally to the SEC a
copy of any omitted schedule or exhibit upon request by the SEC.
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