The business world was abuzz on Monday as Standard General LP took a significant step toward enlarging its stake in gaming corporation Bally’s by issuing a non-binding proposal, thrusting the company’s stock value to new heights. A substantial rise to $14.08, marking an impressive 33.46% increase from Friday’s closing price, was observed on the NYSE following the public disclosure of the offer via an SEC 13D filing.
In response, Bally’s took immediate action by establishing a special committee. This committee, composed of “independent and disinterested directors,” is tasked with a crucial role—to thoroughly examine the details of Standard General’s proposal to buy all outstanding shares of Bally’s common stock they do not currently own, which constitutes about 75% of the company. Furthermore, this committee is entrusted to explore any other strategic alternatives to Standard General’s proposal.
Bally’s, in its statement about the formation of the new committee, stressed that there is “no assurance” that the offer will lead to a favorable response or culminate in a binding agreement.
It’s noteworthy to mention that this represents Standard General’s second attempt to fully acquire Bally’s. Their initial overture in January 2022 was at a much higher valuation of $38 per share. The recent proposition, however, indicates a valuation more than 50% lower than the previous year’s bid. The offer letter explained that the “proposed transaction would be subject to the approval of the board of directors of the company and the negotiation and execution of mutually acceptable definitive transaction documents.”
The takeover offer eyed the shares at a 41% premium compared to Bally’s stock value at the close of the previous week at $10.55. The revelation of the offer led to an immediate market reaction, with Bally’s share value leaping 25.24% to $13.30 on Monday. In further developments, at the close of trading on Tuesday, Bally’s shares stood at $14.08, sustaining the significant surge experienced since the offer’s announcement. Bally’s total market capitalization has reached over $600 million amidst these agency-defining developments.
The previous year painted a somewhat tumultuous financial portrait for Bally’s, reflective in the significant drop from Standard General’s first bid. Throughout 2023, Bally’s grappled with persistent net losses, though it managed to reduce total operating costs by 8.7% to $2.34 billion. Nonetheless, the company reported a pre-tax loss of $167.6 million, which, while substantial, was an improvement over 2022’s loss of $454.5 million. Similarly, despite adverse conditions, Bally’s managed to report an adjusted EBITDA of $527.3 million, even though this figure was down by 3.9% in comparison to previous earnings.
The year did not lack in major developments for Bally’s, though. Early in the year, the company announced a 15% reduction in its North American interactive workforce as a cost-saving measure. In conjunction with this, there were reports that Diamond Sports Group, which operates the Bally-branded TV sports networks, was nearing the brink of bankruptcy.
Despite the rocky start, Bally’s restructuring efforts started gaining traction with the onboarding of new CEO Robeson Reeves in March. Other highlights included Bally’s strategic maneuver to outsource its sports betting technology stack to Kambi and White Hat Gaming, showcasing a flexible and adaptive business model. The company also expanded its digital footprint by launching Bally’s-branded online casino on an existing Megaways Casino site in the UK iGaming market during September.
These developments illustrate Bally’s commitment to remaining a competitive force in the gaming industry, despite the significant challenges it has faced. As the special committee sets out to review Standard General’s unfolding offer, stakeholders and market observers alike eagerly await further moves that will determine the future course of this iconic gaming establishment.
