GTECH to Acquire Atronic Stake

WEST GREENWICH, Rhode Island – (PRESS RELEASE) -- GTECH Holdings Corporation (NYSE: GTK) and the owners of privately-held Gauselmann Group today announced that both parties have entered into an agreement whereby GTECH will acquire a 50 percent controlling equity position in the Atronic group of companies owned by Gauselmann. The remaining 50 percent of Atronic will be retained by the owners of the Gauselmann Group. The final purchase price will be calculated through a performance-based formula equal to eight times Atronic's EBITDA (earnings before interest, tax, depreciation, and amortization) for its fiscal year 2006 ending December 31, 2006. In addition, in the 12 months after the closing, Atronic will also have the potential to receive an earn-out based on its 2007 performance above specified thresholds.

Based on Atronic's medium-term outlook, GTECH expects the all-cash transaction will have a total value of approximately $100 million to $150 million, for its 50 percent share including the assumption of debt.

"The alliance of GTECH and the Gauselmann Group represents the coming together of two industry leaders that share a common vision of the future of machine gaming. GTECH and Gauselmann are creating in Atronic a new strong global competitor in gaming content, equipment, systems and services, and a market innovator with strong positions in the highest growth gaming markets," said Gauselmann's Co-Chairman and CEO Michael Gauselmann and GTECH President and CEO W. Bruce Turner jointly.

"This transaction is a central part of the growth strategy for both companies. It is a fair value for both in that it is structured as a market driven multiple of performance," said Messrs. Gauselmann and Turner.

"Today's announcement is a significant step in our continuous efforts to grow our casino market leadership with a very strong global U.S.-based partner," said Mr. Gauselmann.

"The Gauselmann Group is the largest manufacturer/operator of coin-operated gaming machines in Europe. Atronic is the leading video slot provider in Europe, Russia, and Latin America, and is licensed in 196 worldwide gaming jurisdictions with a solid and growing presence in the United States. We offer products and services in 83 countries and 20 U.S. states, including 138 Native American tribes, and have become known for our highly competitive games, products, and services. This new alliance with GTECH will provide us with the additional capital and resources essential for our U.S. growth and overall increasing competitiveness in the global slot industry."

"The alliance with Gauselmann is the next logical step for GTECH to achieve its long-term strategic objectives within the gaming markets we have targeted," said Mr. Turner.

"As the government-sponsored and commercial gaming markets converge, video gaming has become an expanding component of our growth strategy. Our interest in Atronic dramatically broadens our government-sponsored game and systems offerings, bringing a new library of games, as well as commercial casinos and central monitoring system applications and services."

The transaction, which is contingent upon regulatory and gaming license approvals, and other closing conditions, is expected to be completed on December 31, 2006.

However, starting immediately and during the next 24 months, Atronic and GTECH will pursue mutually beneficial global projects. As part of the transaction, beginning in 2012, GTECH has the option to purchase Gauselmann Group's interest in Atronic and Gauselmann has a reciprocal right to sell its interest to GTECH. There are also mutual put/call rights that may become effective before 2012, under certain circumstances.

"Atronic has a strong management team with a tremendous amount of experience in global sales and distribution, as well as platform and content development. Their current system portfolio provides a number of system modules that will enhance our current video central system, including player tracking, bonusing, and cashless wagering, thus enabling us to sustain market leadership," continued Mr. Turner.

"Atronic also has wide-area progressive games that are currently operational in a number of U.S. jurisdictions."

Atronic's recently launched e-motion(TM) video gaming platform is widely hailed as the industry's most ergonomically advanced video gaming machine. With its unique cabinet design, e-motion creates an exclusive player environment, with brilliant 3-D graphics, state-of-the-art technology, and advanced player interactive game concepts.

"With our recent investment in a new R&D facility in Arizona as part of our global R&D strategy implementation, Atronic expects to create a growing number of new games each year starting with 40 in 2005," continued Mr. Gauselmann.

"Today, Atronic's library consists of more than 80 active video game titles with various cabinet styles, and numerous additional games and products are slated for market introduction to address each single global casino-style product segment."

"As the lottery industry evolves from system centric to more content centric, building a large and strong library of games will be essential to our long-term success," said Mr. Turner.

The Atronic transaction will also strengthen GTECH's Spielo subsidiary. The two companies are complementary and will ultimately enable each organization to leverage the other's strengths. Both companies have agreed to cross-license and distribute each other's content starting immediately.

When appropriate, Spielo and Atronic will share infrastructure and work together on developing a common systems platform to serve all GTECH and Atronic markets. Founded in 1993, Atronic currently employs more than 800 people in its offices in Germany, Austria, Australia, Africa, United Kingdom, Peru, Nevada (Las Vegas and Reno), Arizona, Mississippi, and Peru. Atronic's revenues for its current fiscal year ending December 31, 2004 are expected to be approximately $200 million, about 25 to 30 percent of which will come from its North American customers.

Under this agreement, Atronic will continue to maintain its current operations and its established worldwide brand identity. A cooperation and integration plan is already under development in order to assure customers of uninterrupted services and a seamless transition.

When appropriate, Atronic will begin collaborating with GTECH in order to maximize opportunities for both companies prior to the December 31, 2006 closing. In the first full fiscal year, 2008, which ends in February 2008, GTECH expects Atronic's revenues to be in the range of $250 million to $300 million, and be earnings-per-share neutral to slightly positive.