Scientific Games, Bally Technologies To Merge In $5.1 Bln Deal

(RTTNews) - Scientific Games Corp. (SGMS) and Bally Technologies, Inc. (BYI) Friday said they have entered into a definitive merger agreement for Scientific Games to acquire all of the outstanding Bally common stock for $83.30 per share in cash.

The transaction is expected to be immediately accretive to Scientific Games' earnings per share and cash flow. Both stocks soared in pre-market trading.

The aggregate transaction value is about $5.1 billion, including the refinancing of around $1.8 billion of existing Bally net debt. The offer price represents a 38 percent premium to Bally's closing stock price on July 31.

The deal was unanimously approved by the boards of directors of the two companies and expected to be completed in early 2015.

The merger will expand Scientific Games' portfolio of products and solutions to include leading casino management systems and table products, such as automatic shufflers, proprietary table games and electronic table systems. It will also expand the range of Scientific Games' social and real-money iGaming and iLottery products and services.

The combination is expected to have global sourcing, production, engineering and product development capabilities, as well as a large installed global base of diverse recurring revenue products and services.

Scientific Games and Bally generated combined revenue of around $3 billion in the 12-month period ended March 31.

Scientific Games expects to achieve $220 million of cost synergies and $25 million of capital expenditure savings by consolidating operations and generating efficiencies in manufacturing, engineering, field and customer service and administrative operations.

Scientific Games also anticipates incurring $75 million of costs to achieve the synergies and $40 million in capital costs to complete the integration of the companies.

Gavin Isaacs, Scientific Games' President and CEO, said, "...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."

Upon closing of the transaction, Isaacs will continue as President and Chief Executive Officer of Scientific Games. Haddrill and David Robbins, Chairman of the Board of Directors of Bally, is expected to join the board of directors of Scientific Games, and he is expected to serve as Vice Chairman.

The acquisition will be financed with debt and cash on hand and Scientific Games has obtained committed debt financing for the transaction.

SGMS closed down 3.3 percent at $8.54, but jumped 17.8 percent in pre-market activity.

BYI settled down 1 percent at $60.17, and surged 34 percent in pre-market activity.