Scientific Games, a number one developer of technology-based services and products and associated content for worldwide gaming and lottery markets, has entered right into a $5.1 billion acquisition/merger agreement with Bally Technologies, a supplier slot machines, table game products, systems, mobile, and iGaming solutions, during which Scientific Games will purchase Bally for $3.1 billion and assume $1.8 billion in Bally debt.
The deal, which have been approved by the board of directors for both companies, continues to be subject to approvals from Bally shareholders and state and federal regulatory agencies, and is anticipated to near in early 2015, in line with company press materials. The purchase may be financed with debt and cash on hand.
The transaction would expand Scientific Games’ portfolio of goods and solutions to incorporate leading casino management systems and table products, including automatic shufflers, proprietary table games and electronic table systems. It will also expand the variability of Scientific Games’ social and real-money iGaming and iLottery products and services.
This expanded portfolio is anticipated to place Scientific Games to raised cross-utilize content and technology around the lottery, gaming and interactive sectors to propel future growth. Scientific Games and Bally generated combined revenue of roughly $3.0 billion within the 12-month period ended March 31, 2014. Scientific Games expects to reach an anticipated $220 million of cost synergies and $25 million of capital expenditure savings by consolidating operations and generating efficiencies within the areas of manufacturing, engineering, field and customer support and administrative operations.
The share price for Scientific Games stock jumped 17 percent today after the deal was announced early this morning, in line with the Wall Street Journal. The proportion price for bally was up 29 percent.
Upon closing of the transaction, Richard Haddrill, CEO for Bally Technologies and David Robbins, chairman of the board of directors for Bally, will join the board of directors of Scientific Games, with Haddrill anticipated to function vice president. Gavin Isaacs, president and CEO of Scientific games, will continue in his role. Isaacs has previously held high-level executive positions with Bally and Bally subsidiary SHFL entertainment.
“The acquisition of Bally provides us with a novel opportunity to mix two exceptional companies with long track records of making leading-edge games and gaming technology products for players and delivering innovative solutions to our customers,” said Isaacs in a prepared statement. “With leading gaming, lottery, and interactive content, world-class systems capabilities and table game offerings, we believe that the combined company might be uniquely positioned as a strategic partner for gaming and lottery operators, offering a highly diversified suite of value-enhancing services across multiple worldwide distribution channels and platforms… The combined company will feature world-class research and development capabilities, an expanded base of recurring revenues and bigger worldwide penetration in key geographies, including the AustralAsia region. Along with the strategic value of the transaction to our customers, we think to create significant shareholder value because the transaction is anticipated to deliver immediate earnings and cash flow accretion and can let us meaningfully reduce our leverage over the following three to four years.”
“The combination with Scientific Games will benefit our customers and shareholders,” Haddrill said. “Increased scale, geographic diversity and product development capabilities will create a brand 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 top share price in our history. We glance forward to working with our new colleagues at Scientific Games to execute an in depth integration plan to understand customer satisfaction and extra value.”
The Scientific Games/Bally Technologies arrangement is simply the most recent in a spate of large-scale gaming supplier acquisition/mergers that experience occurred during the last year. In July, Italy-based lottery and gaming provider GTECH acquired International Game Technology, the slot, systems and online gaming supplier, for $6.4 billion—$4.7 billion in cash and stock and the belief of $1.7 billion in outstanding IGT debt. Some gaming analysts suggest the Scientific Games/Bally arrangement will have been a response to this early deal.
Earlier this summer, Aristocrat Technologies announced the $1.28 billion purchase of Online game Technology, a Tennessee-based producer of sophistication II slot games and systems for the tribal gaming market. Last year, Scientific Games acquired WMS Gaming for $1.5 billion and Bally Technologies bought SHFL entertainment for $1.3 billion.
The slow recovery of the North American casino industry from the new recession is generally given because the explanation for the uptick in merger and acquisition activity among gaming suppliers. The industry could also be facing issues with weak consumer spending, casino oversaturation, competition from the Web, the decline in core casino gamblers and difficulties adapting product the more youthful generations.
Read More... [Source: Gaming Industry News]
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