Bally’s Board Forms Committee to Mull Standard General Takeover Offer

Posted on: February 4, 2022, 11:06h. 

Last updated on: February 4, 2022, 02:05h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Bally’s (NYSE:BALY) said it has formed a special committee to evaluate the recent takeover offer made by hedge fund Standard General, the casino operator’s largest shareholder.

Bally's
Standard General and founder Soo Kim wants to acquire Bally’s. The gaming company said its board formed a committee to evaluate the bid. (Image: Meet AC/Casino.org)

Standard General is controlled by Soo Kim, a member of Bally’s board. Last week, the investment firm filed an acquisition bid valuing the gaming company at $38 a share, or just over $2 billion. In a Form 13/D filing with the Securities and Exchange Commission (SEC), Standard General says it will not pursue the deal unless it’s approved by a special committee.

There can be no assurance that any definitive offer will be made or accepted, that any agreement will be executed, or that any transaction will be consummated,” said Bally’s in a statement announcing the formation of the committee.

The group mulling the proposals is comprised of “independent and disinterested directors,” implying Kim isn’t on the committee.

Other Interesting Tidbits in Bally’s Takeover Situation

While Bally’s stock rallied in the wake of the Standard General acquisition proposal, it hasn’t reached the $38 a share offer price.

Some analysts believe the hedge fund’s offer is more of a starting point than a final bid, and that’s possible the price tag moves higher. It’s also been noted that Gamesys investors may not be thrilled by the current terms of the Standard General offer.

When Bally’s acquired the UK-based online gaming company last year, some Gamesys investors opted to accept equity in the buyer when the stock was trading north of $50. That could be a sign they won’t be in favor of an acquisition proposal that values Bally’s at a price that’s significantly below their stakes.

Lee Fenton is Bally’s chief executive officer. He previously held that job at Gamesys. Like Standard General’s Kim, Fenton is also a Bally’s director.

The $38 per share offer is also well below the almost $58 consensus price target on the stock, and about half the 52-week high.

Could Another Offer Emerge?

It remains to be seen if Kim ups the Standard General offer. Likewise, it’s not immediately clear if another suitor will emerge for Bally’s.

The board of directors did, however, say it will evaluate “any potential strategic alternatives to the proposal.” With a market capitalization of $1.86 billion, Bally’s is easily digestible for any number of potential suitors, and if an offer is credible, the board would be compelled to consider it.

Bally’s operates 14 casinos in 10 states and owns the real estate of most of those venues, potentially making it more attractive to outside buyers. The company also owns a deep portfolio of digital gaming, sports wagering, fantasy sports, and technology assets that could be alluring to buyers seeking vertical integration and bolster their profiles in the internet gaming space.