Venetian operator Apollo Global Management is selling its 22% stake in Las Vegas-based gaming equipment supplier AGS, a stake the private equity firm has held for nearly 10 years.
Apollo is the largest shareholder in AGS, which is one of the fastest growing manufacturers of gaming equipment in the industry.
According to a filing with the Securities and Exchange Commission Monday evening, Apollo owns more than 8.2 million shares of AGS, which would be worth more than $52 million based on Monday’s closing price of 6, $35 on the Nasdaq.
In a statement, AGS did not provide a reason for the sale and said the company would not receive any proceeds from the transaction.
The stake in AGS is small by the standards of Apollo, which previously owned Caesars Entertainment but sold the stakes in 2019, two years after completing a complicated two-year Chapter 11 bankruptcy restructuring that changed the Caesars ownership structure and erased $16 billion from the company. pre-bankruptcy $25.6 billion in off-book debt.
Apollo paid $2.25 billion for the operations of Venetian, Palazzo and Venetian Expo in February as part of a $6.25 billion purchase from Las Vegas Sands Corp. The VICI real estate investment trust paid $4 billion for the land and buildings.
Las Vegas Sands provided Apollo with $1.2 billion in seller financing, with the private equity firm providing an additional $1.05 billion in cash and financing.
Earlier this month, Apollo received preliminary approval from the Nevada Gaming Control Board to distribute an estimated $620 million dividend to investors and distribute bonuses to the station’s 7,000 employees.
Apollo’s departure from AGS means an upheaval within the AGS Board of Directors. Apollo Partner and Co-Head of Private Equity David Sambur is Chairman of the company and Apollo Partner Daniel Cohen is a member of the Board of Directors.
“Apollo’s 22% stake has been a persistent problem for investors,” Truist Securities gaming analyst Barry Jonas said in a research note Monday. “We believe its exit could attract additional investor interest.”
Apollo bought AGS in 2013 and led the acquisition of 20 different gaming companies, the largest being slot machine designer and supplier Cadillac Jack in 2015. Apollo took AGS public in January 2018 with an initial public offering of $16 per share.
In August, rival gaming equipment supplier Inspired Entertainment offered to acquire AGS for $10 per share, a deal that was ultimately rejected.
Macquarie Securities gaming analyst Chad Beynon said in a research note Monday afternoon that talks of the deal confirm for AGS the value of the company’s shares.
The company has grown through its business with tribal casinos in Oklahoma and other states.
More than 70% of AGS’s revenue comes from slot machines where the company shares gaming proceeds with casino operators.
“We continue to see AGS as a high-value name in the space,” Beynon wrote. “AGS is well positioned to grow the business in 2023 through higher (slot) sales, continued premium install placements, higher table revenues and growth in interactive games.”