
Please try another search
By Shailaja Sharma and Ramkumar Iyer
(Reuters) - U.S. Slot machine maker Scientific Games Corp (O:SGMS) will buy larger rival Bally Technologies Inc (N:BYI) in a $3.27 billion deal, the latest in a consolidating U.S. gaming industry.
The deal, which was put together in just over three weeks, will strengthen Scientific Games' casino management systems and table gaming products as well as help it expand in Australasia.
A new generation of gamers who prefer to make bets online have left U.S. slot machine makers questioning their own relevance. They also face increased competition as their core lower-income gambler base keep a tight lid on spending.
Credit rating firm Moody's downgraded its outlook for the U.S. gaming industry in June to "negative" from "stable".
"Following a trail of recent mergers, we believe the combination of Scientific Games and Bally Technologies makes sense strategically," BMO Capital Markets analyst Edward Williams said.
Italian gaming group GTech SpA (MI:GTCH) said last month it would buy slot machine maker International Game Technology (N:IGT) for $4.7 billion to strengthen its U.S. presence.
Scientific Games bought slot machines maker WMS Industries for $1.5 billion in January last year. Bally acquired Israeli online casino company Dragonplay Ltd in June, and casino equipment maker SHFL Entertainment in 2013.
Scientific Games's $83.30 per share cash offer was a 38 percent premium to Bally's Thursday closing of $60.17 on the New York Stock Exchange. The deal was valued at $5.1 billion, including debt of $1.8 billion.
Bally's shares jumped as much as 40 percent to a record $84.66 in morning trading, but were later up 30 percent at $78. Scientific Games's shares were up 3 percent at $8.78 after rallying up close to 20 percent.
BMO's Williams said he did not expect a competing bid, citing the high premium and the cost savings the deal would generate.
Scientific Games, backed by billionaire investor Ronald Perelman, said it expects to save $220 million and cut $25 million in capital expenditure annually by the end of the second year of the deal's close. It also expects tax benefits.
Perelman's MacAndrews & Forbes Holdings Inc holds a nearly 40 percent stake in Scientific Games.
The deal will add to Scientific Games's earnings per share and cash flow immediately on its closing — likely early next year — said the company, which had a market capitalization of $720 million as of Thursday.
Scientific Games estimated its revenue at $1.6 billion and that of Bally at $1.4 billion for the year ended March 31.
The company said it would finance the deal with cash on hand and debt financing from BofA Merrill Lynch, J.P. Morgan and Deutsche Bank Securities, who advised it on the deal. Cravath, Swaine & Moore LLP served as the legal adviser.
Macquarie Capital and Groton Partners served as financial advisers to Bally. Its legal advisers are Skadden, Arps, Slate, Meagher & Flom LLP.
(Additional reporting by Supantha Mukherjee and Siddarth Cavale in Bangalore; Editing by Simon Jennings and Joyjeet Das)
By Jeffrey Dastin (Reuters) - A labor group that did not secure enough votes from Amazon.com Inc (NASDAQ:AMZN) warehouse workers in Alabama to form a union has formally objected...
By Deena Beasley (Reuters) - Resuming the use of Johnson & Johnson (NYSE:JNJ)'s COVID-19 vaccine in the United States will require clear guidelines for the medical community on...
By Nerijus Adomaitis OSLO (Reuters) - Equinor urged its shareholders on Monday to reject a proposal by an activist group to set intermediate targets for reducing emissions from...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.