Bally Technologies To Acquire SHFL Entertainment For About $1.3 Bln - Update

(RTTNews) - Bally Technologies, Inc. (BYI) Tuesday said it has entered into a definitive agreement to acquire gaming device maker SHFL entertainment, Inc. (SHFL) for $23.25 per share in cash, representing a total enterprise value of about $1.3 billion, including debt of $8 million and cash of $41 million as of April 30, 2013.

In addition, Bally Technologies provided fiscal 2014 earnings per share guidance. SHFL shares are currently up about 22 percent in pre-market trading, while, Bally shares climbed about 6 percent.

The acquisition is anticipated to provide accretion to Bally's diluted earnings per share and free cash flow in the first year after completion.

The Las Vegas, Nevada-based SHFL entertainment makes gaming devices, and operates inter-casino linked systems and slot routes. Bally manufactures technology-based gaming devices and systems.

The transaction has been unanimously approved by the boards of both the companies. The deal is expected to close by the second quarter of calendar year 2014.

"Both Bally and SHFL have long histories of proven innovation, excellent customer service and successfully anticipating and adapting to changes within our industry, which makes bringing our two companies together a great strategic fit," said Ramesh Srinivasan, Bally's president and chief executive officer.

The consideration represents a premium of 24 percent to the closing price of SHFL stock on July 15, 2013.

Based on the respective trailing 12-month periods ended March 31, 2013 for Bally and April 30, 2013 for SHFL, the combined company generated about $1.3 billion in revenues, $644 million of which are recurring in nature. Adjusted EBITDA totaled $415 million. Once combined, the company expects to achieve synergies of at least $30 million.

Bally said it has obtained committed financing to complete the purchase and the transaction is not subject to a financing contingency.

Goldman, Sachs & Co. and Groton Partners served as financial advisors and Gibson, Dunn & Crutcher LLP served as the legal advisor to Bally.

For fiscal 2014, Bally Technologies expects earnings per share to be in the range of $3.70 to $4.05, not reflecting the impact from the acquisition of SHFL or any acquisition-related costs or savings.

On average, 15 analysts polled by Thomson Reuters expect earnings per share of $3.85 for the year. Analysts' estimates typically exclude one-time items.

Bally shares closed Monday's regular trading at $60.91 on the NYSE. In the pre-market activity, the shares are currently up 6.17 percent.

SHFL ended on Monday at $18.70 on the Nasdaq. The shares are up 22.19 percent in pre-market.