If you want to make money in a casino, be the person who makes the slot machines. If you want to make even more, acquire the other companies that do the same.
That’s the strategy that Scientific Games Corporation is taking. The gaming-equipment manufacturer just inked a deal to acquire Bally Technologies for $3.3 billion in cash. Additionally, Scientific will spend $1.8 billion refinancing Bally’s debt. This acquisition gives Scientific control over Bally’s stable of game, its casino-management system, and gaming-related table products. Bally also operates an online-gaming portal that enables casinos to run slots and table games for real-money social gaming online. The deal is worth $83.30 per share to Bally investors, which is 38 percent above Bally’s closing price yesterday.
This vastly expands Scientific’s presence in the casino-gaming sector. The company specializes in instant-lottery tickets as well as some gaming software.
“The acquisition of Bally provides us with a unique opportunity to combine two exceptional companies with long track records of creating leading-edge games and gaming technology products for players and delivering innovative solutions to our customers,” Scientific Games chief executive officer Gavin Isaacs said in a statement. “With leading gaming, lottery, and interactive content, world-class systems capabilities and table game offerings, we believe that the combined company will be uniquely positioned as a strategic partner for gaming and lottery operators, offering a highly diversified suite of value-enhancing products and services across multiple worldwide distribution channels and platforms.”
Isaacs will operate as CEO of the newly merged entity, while Bally chief executive Richard Harddrill and chairman David Robbins will join Scientific’s board of directors.
The two companies managed to generate $3 billion in revenue in the year-long period ending March 31, and Isaacs points out that the deal should immediately benefit Scientific’s cash flow and per-share earnings. Both sides anticipate that the deal will close in early 2015. As both companies are in full compliance with gaming regulators in the U.S. and around the globe, Bally and Scientific don’t predict any issues.
“The combination with Scientific Games will benefit our customers and shareholders,” said Haddrill. “Increased scale, geographic diversity, and product development capabilities will create a new runway of growth opportunities through new products and a comprehensive portfolio of customer-focused solutions. This transaction delivers immediate value to our shareholders, and the highest share price in our history. We look forward to working with our new colleagues at Scientific Games to execute a detailed integration plan to realize customer satisfaction and additional value.”
Bally Technologies is the casino-gaming division of what was once Bally Entertainment, the pinball-manufacturing company responsible for such tables as Playboy as well as The Twilight Zone under its Midway label. Bally has changed hands from Hilton Hotels to Harrah’s Entertainment since.
Powered by VBProfiles