Bally’s Accepts $4.6 Billion Takeover Bid from Standard General

Bally’s Corporation has accepted a takeover bid from Standard General, the hedge fund managed by Bally’s Chairman of the Board Soo Kim. The definitive agreement, announced Thursday, values the company at $4.6 billion, and promises to alter the landscape of casino and entertainment operations in the U.S.

Under the terms of the agreement, Bally’s stockholders will receive $18.25 per share. This is a substantial 71% premium over the trading average of Bally’s stock 30 days prior to the initial takeover bid from Standard General on March 29.

This offer represents a marked increase from Standard General’s initial bid of $15 per share. That proposal was met with considerable opposition from prominent investors who argued that the price undervalued the company.

In April, Dan Fetters and Edward King of the asset management fund K&F Growth Capital voiced their dissent through a letter urging Bally’s shareholders to reject the $15 per share proposal. Their efforts highlighted the contention surrounding the valuation of Bally’s assets and the future potential of the company.

Shareholders of Bally’s have the option to either cash out at the offered price or roll over their stock positions into ownership in the newly formed corporation. This flexibility is aimed at providing shareholders with a choice to either capitalize on the immediate premium or continue their investment in the combined entity’s future.

Standard General become behemoth

The transaction will also see Bally’s merge with another gaming entity owned by Standard General, The Queen Casino & Entertainment. This merger is poised to create a formidable presence in the gaming industry, combining Bally’s 17 casinos with Queen Casino’s operations, which include two casinos in Baton Rouge, Louisiana, one in East St. Louis, Illinois, and another in Marquette, Iowa. The newly combined entity will boast a total of 19 casinos across 11 states, significantly expanding its footprint and market influence.

The Queen Casino & Entertainment is also notable for being the largest shareholder in Intralot, an iGaming provider that recently faced ejection from Washington, D.C. before being replaced by FanDuel. This connection emphasizes the strategic advantages that Standard General sees in combining its gaming assets to create a more competitive and diversified portfolio.

Kim, who serves as both the chairman of Bally’s board and the manager of Standard General, already the largest single Bally’s shareholder before now, has been a pivotal figure in orchestrating this merger. His dual roles have been under scrutiny, especially concerning the initial offer price, which many investors felt undervalued Bally’s. The increase to $18.25 per share appears to be a strategic move to address these concerns and secure shareholder approval.

The acceptance of Standard General’s bid marks a significant milestone for Bally’s, which has been undergoing a series of transformations in recent years. Originally a storied brand in the casino industry, Bally’s has expanded its reach through various acquisitions and strategic moves, including a foray into online gaming and sports betting. The merger with Queen Casino & Entertainment aligns with this broader strategy of diversification and growth.

A good move for Bally’s

Bally’s CEO George Papanier expressed optimism about the merger, stating that the combined entity would be well-positioned to capitalize on new opportunities in the rapidly evolving gaming industry. He highlighted the potential for synergies between the two companies, particularly in areas such as marketing, technology integration, and operational efficiencies.

The merger also comes at a time when the gaming industry is experiencing significant changes, driven by the expansion of legalized sports betting and the growth of online gaming. These trends are reshaping the market, creating new revenue streams and competitive dynamics. The combined resources and expertise of Bally’s and Queen Casino & Entertainment are expected to enhance their ability to navigate these changes and capitalize on emerging opportunities.

In addition to the strategic benefits, the merger is also anticipated to generate substantial financial gains. Analysts have predicted that the combined entity could achieve higher profitability through economies of scale and a more extensive customer base. The integration of operations and the streamlining of management structures are expected to result in cost savings and increased efficiency.

However, the merger will also face regulatory scrutiny and the challenge of integrating two distinct corporate cultures. Ensuring a smooth transition and maintaining operational continuity will be critical to the success of the combined entity. Both companies have indicated their commitment to addressing these challenges proactively and working closely with regulatory authorities to secure the necessary approvals.

Shareholders apparently like the deal. Bally’s was trading at $13.52 Wednesday afternoon, about the same level it had seen over the previous five days. After the news broke, the stock jumped to $16.83.