Melco takes control of VendingData in HK$2b deal
Melco International Development, the Macau casino investor controlled by Lawrence Ho Yau-lung, said gaming technology unit Elixir Group had signed a HK$2.04 billion deal to take control of Las Vegas-based slot machine and gaming equipment maker VendingData Corp.
American Stock Exchange-listed VendingData will issue new shares and share warrants to Elixir representing 82.68 per cent of its enlarged share capital or 470 per cent of its existing share capital.
Elixir, which has a 2.9 per cent stake in the US firm, will serve as VendingData's exclusive Asia-Pacific sales agent for slot machines and will target installations in casinos and slot halls across the region on a post-tax revenue-sharing basis.
Melco's shares shed 3.7 per cent after yesterday's announcement to close at HK$10.92.
The deal effectively gains the wholly owned Elixir a back-door US listing for its newly revamped slot machine sales and distribution business.
The company aims to sell 3,000 slot machine units across Asia by the end of next year, about 30 to 40 per cent of which will be self-branded products, with the balance coming from reselling machines from rival manufacturers in the United States, Australia and Europe.
VendingData will claim at least 20 per cent of post-tax gaming revenues from each machine installed by Elixir, with the balance going to the casino operator. The companies plan to target growth markets including the Philippines, Vietnam and Cambodia.
A previous agreement signed in February designates Elixir the exclusive Asia sales agent for VendingData's line of casino equipment including playing card shufflers.
Profit from Macau-based Elixir fell 28 per cent last year to HK$23.7 million, down from HK$32.8 million in the previous year, as the firm attempted to transform itself from an equipment reseller into a full-service electronic game developer and manufacturer.
As part of the shift, Elixir will relocate its research and development activities to Zhuhai and merge them with VendingData's existing operations in the mainland city.
Shares in parent Melco have fallen 41 per cent this year and 25 per cent since the May 12 opening of the US$583.6 million Crown Macau casino hotel, a joint-venture project with Australia's Publishing and Broadcasting, in which the Hong Kong firm has an indirect 41 per cent stake.
The Crown is the first of three casino resorts totalling US$3.3 billion the partners are developing in the territory.