Bally’s Stock Jumps as Shareholder Offers To Take over the Gaming Company

Article by : Erik Gibbs Mar 13, 2024

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Standard General, an entity already possessing a 23% stake in gambling and betting operator Bally’s Corporation, has presented a non-binding letter, as disclosed in a US Securities and Exchange Commission (SEC) 13D filing. In this communication, the hedge fund expresses its intent to acquire the remaining outstanding shares of common stock that it doesn’t already own.

The proposed offer is $15 per share, a substantial 41% premium over Bally’s closing price on the NYSE, which was $10.55 last Friday. The news of the potential purchase sent the stock up to $13.82 on Monday.

At the same time, however, the offer is considerably lower than the amount Standard General presented when it tried to buy the gaming company previously. The current $15-per-share offer suggests that Standard General now values the company at over 50% less than it did just two years ago when it was appraised at more than $2 billion.

Bally’s overall market capitalization exceeds $600 million. In response to this development, Bally’s share price experienced a notable surge, rising by 25.24% to reach $13.30.

The offer letter sets the stage for potential negotiations and underscores that the proposed transaction’s realization would hinge on the approval of the company’s board of directors.

It further suggests the creation of a special committee comprising independent directors to thoroughly assess the proposal and furnish a recommendation to the board.

This marks Standard General’s second attempt at a complete takeover of Bally’s. The initial endeavor unfolded in January 2022 when the hedge fund proposed an acquisition at $38 per share.

Soo Kim, the chairman of Standard General, had previously stated that the $38 price tag represented a substantial 30% premium compared to Bally’s closing share price of $29.27 on January 24, 2022.

In the context of Bally’s performance in 2023, the downward revision in price aligns with the company’s sustained net loss.

Despite a commendable 8.7% reduction in accumulated total operating costs to $2.34 billion during 2023, the inclusion of $289.7 million in other expenses resulted in a pre-tax loss of $167.6 million. This in itself was an improvement from the $454.5 million in 2022.

Nevertheless, the adjusted EBITDA for 2023 experienced a marginal dip of 3.9%, settling at $527.3 million.

In the past year, Bally’s implemented significant changes, including a 15% reduction in its North American interactive workforce and addressing financial challenges with Diamond Sports Group. Despite these hurdles, the appointment of CEO Robeson Reeves in March marked a positive turning point.

Bally’s achieved noteworthy milestones, such as outsourcing its sports betting tech stack to industry leaders Kambi and White Hat Gaming.

Last September, the company made a strategic move into the UK iGaming sector, launching its Bally-branded online casino on the Megaways Casino site operated by Gamesys.

Reeves’ leadership showcased Bally’s adaptability and resilience in navigating challenges.