US betting firm Scientific Games has announced that it has secured a deal to purchase Bally Technologies for $5.1 billion, plus the refinancing of Bally's existing debts.
As a result of the deal Bally shareholders will be paid a cash price of $83.30 per share, which is 38% above the closing price of the stock price as of July 31st.
For Scientific Games, the deal represents an opportunity refinance existing debts while also getting above market value for its shareholders. For Scientific Games will see its internet gambling and lottery games library enhanced by the deal, allowing the firm to offer extended services in regulated markets.
The deal will reportedly be financed with cash on hand as well as with debt, with Scientific Games already securing the credit to complete the deal.
Commenting on the acquisition Scientific Games President and CEO Gavin Isaacs said, "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."
"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.
"Having worked side-by-side with the talented teams at Bally and more recently Scientific Games, I am confident this combination brings together best-of-breed cultures and is occurring at a truly opportune time as both companies are committed to bringing the highest value products and services to customers," Isaacs continued.
"The combined company will feature world-class research and development capabilities, an expanded base of recurring revenues and greater worldwide penetration in key geographies, including the AustralAsia region.
"In addition to the strategic value of the transaction to our customers, we expect to create significant shareholder value as the transaction is expected to deliver immediate earnings and cash flow accretion and will allow us to meaningfully reduce our leverage over the next three to four years.
"Reflecting both organizations' recent post-merger integration successes, we have identified and expect to realize $220 million in annual cost synergies and $25 million of annual capital expenditure savings by the end of the second year following the closing of the transaction."
Bally CEO Richard Haddrill added, "The combination with Scientific Games will benefit our customers and shareholders."
"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."