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WMS spins off Midway
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August 11, 1997: 3:34 p.m. ET
WMS holders to receive 86.8 percent stake in tax-free distribution
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NEW YORK (CNNfn) - WMS Industries Inc., the world's largest maker of pinball machines, said it will spin off the remaining $668 million stake in arcade game company, Midway Games Inc., to shareholders.
In October 1996, the Chicago-based company sold 13.2 percent, or 5.1 million shares, of Midway -- maker of video games such as Pacman and Defender -- at $20 each in an initial public offering.
In a statement Monday, WMS said its board has authorized the spinoff of the remaining 86.8 percent, or 33.4 million shares.
The decision follows the spinoff of WMS's hospitality and gaming business. The move was made to enhance Midway's growth prospects, company officials said. In addition, WMS said it believes the spinoff will reduce regulatory burdens by separating ownership of Midway's business from WMS's gaming device business.
As for the existing businesses, WMS chief executive Neil Nicastro told CNNfn the company is content with its current strategic direction.
"Beyond the Midway spinoff, there is no consideration to spin off the other businesses," Nicastro said in a telephone interview.
WMS shareholders will get 1.38 Midway shares for each WMS common share held, assuming that options aren't exercised and convertible debt is not converted into stock.
The transaction is structured to be tax-free, pending a ruling from the Internal Revenue Service. WMS said it expects to complete the spinoff by early 1998. Until then, Midway will be accounted for as discontinued operations.
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