Scientific Games Corp (NASDAQ:SGMS) will apparently buy larger rival Bally Technologies Inc. (NYSE:BYI) for $83.30 in cash per share, for an aggregate transaction value of nearly $5.1 billion.
Scientific Games Corp (NASDAQ:SGMS), which is controlled by billionaire Ronald Perelman, will pay a premium of 38% over Bally’s closing price yesterday.
Industry witness consolidation
The industry has been witnessing quite a bit of consolidation in the past years. For instance, last year, Scientific Games Corp (NASDAQ:SGMS) acquired its competitor, WMS Industries Inc., for $1.5 billion. The acquisition allowed the combined company to provide an extensive range of products and services to the gaming industry worldwide.
Bally Technologies Inc. (NYSE:BYI) too announced last year that it would acquire SHFL entertainment Inc. for $1.3 billion in cash. Bally Technologies Inc. is one of the leading providers of slots, video machines, casino management, interactive applications, and networked server-based systems for the gaming industry worldwide. The company was established in 1932, and its headquarters is in Las Vegas. Bally’s president and chief executive officer said the merger of the two companies is a “great strategic fit.”
Scientific Games + Bally Technologies = revenue of $3 billion
Following Scientific Games Corp (NASDAQ:SGMS)’s acquisition of Bally Technologies Inc. (NYSE:BYI), its portfolio of products and solutions will be expanded to include leading casino management systems and table products, including automatic shufflers, proprietary table games and electronic table systems. The merger would also expand the range of Scientific Games’ social and real-money iGaming and iLottery products and services. The combined revenue of both Scientific Games and Bally Technologies was around $3 billion in the 12-month period that ended March 31, 2014.
Exuding confidence over the acquisition, Scientific Games Corp (NASDAQ:SGMS)’s president and chief executive said: “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”.
The latest deal is valued at $5.1 billion, including refinancing of about $1.8 billion of existing Bally debt. Bally Technologies’ shareholders will get $83.30 a share, representing a 38% premium to Bally Technologies Inc. (NYSE:BYI)’s closing price on Thursday. The Las Vegas-based company’s shares jumped 36% to $82 in premarket trading.