updated 1/10/2006 12:14:25 PM ET 2006-01-10T17:14:25

Lottomatica SpA, the license holder for the Italian lottery, said Tuesday it will pay around $4.65 billion in cash for U.S.-based online lottery operator Gtech Holdings Corp.

Gtech is the world’s top operator of lottery systems, and Lottomatica said it will buy all of Gtech’s outstanding common stock for $35 a share. Including the assumption of Gtech’s debt, the companies valued the deal at $4.8 billion.

“The transaction will create one of the world’s leading gaming solutions providers, with significant global market presence and the broadest portfolio of lottery technology, services and content solutions,” Gtech and Lottomatica said in a joint statement.

The combined company is expected to operate in more than 50 countries and have more than 6,300 employees, the companies said.

The offer represents a premium of 15 percent over the closing price of Gtech shares on Sept. 9, the last trading day before Gtech announced that its board of directors had decided to explore strategic alternatives for the company.

Gtech shares had closed Monday in New York at $33.50, giving it a market capitalization of $4.24 billion. In early trading on the New York Stock Exchange Tuesday, they fell 15 cents to $33.35.

Lottomatica will launch a 1.4 billion euro ($1.7 billion) capital increase to finance the deal, and will seek a 1.9 billion euro ($2.3 billion) syndicated loan.

The companies said Gtech president and chief executive W. Bruce Turner would be proposed as a member of Lottomatica’s board and will become CEO of the company while remaining at the helm of Gtech. Lottomatica’s chairman and CEO, Rosario Bifulco, would resign once the transaction was completed.

Completion of the transaction, which is expected to occur in mid-2006, is subject to approval by Gtech shareholders and regulatory approvals.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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