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"Progressive Gaming was in violation of its terms of its debt agreement, both with a private equity fund as well as the terms of its convertible note with IGT," Sterne Agee & Leach analyst Nicholas Danna told Reuters.
"It was basically forced into a liquidation."
Shares of IGT fell as much as 10 percent, while those of Progressive Gaming touched their lifetime low of 1 cent.
Last month, Progressive Gaming said in a regulatory filing that it would have to sell substantially all of its assets to repay its obligations to one of its lenders, Private Equity Management Group Financial Corp.
The deal would also help IGT, whose products include traditional reel slot machines and progressive payout machines, to bolster its systems business, "which Progressive Gaming had done a nice job of, especially in the international markets," Danna said.
"I think it was a logical fit for IGT to pick up some of those assets."
Danna, however, added the deal would not have broad implications on the casino gaming sector as Progressive Gaming was not of great interest to the other players in the space, such as Bally Technologies Inc, WMS Industries Inc and privately held Aristocrat Leisure Ltd.
As part of the deal, Progressive Gaming's global operations will be integrated with IGT's respective offices in Europe, Asia, Australia, Latin America, Canada and the United States.
IGT shares were down about 6 percent, or 72 cents, at $11.23 Tuesday afternoon on the New York Stock Exchange.
PGIC shares were trading down about at 8 cents on Nasdaq.
(Editing by Vikram S Subhedar, Amitha Rajan) Keywords: PROGRESSIVEGAMING/IGT
(dhanya.skariachan@thomsonreuters.com; Reuters messaging: dhanya.skariachan.reuters.com@reuters.net; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800)
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