Bally’s Hires Investment Bank, Law Firm to Mull Standard General Takeover Bid

Posted on: February 22, 2022, 07:44h. 

Last updated on: February 22, 2022, 02:03h.

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

Bally’s Corp. (NYSE:BALY) announced today it has hired an investment bank and law firm to evaluate a takeover offer. It formed a special committee earlier this month to consider a $38 per share proposal made by hedge fund Standard General.

Bally's
Bally’s Atlantic City. The gaming company hired an investment bank and a law firm to evaluate a takeover proposal. (Image: Getty Images)

The special committee revealed it retained Macquarie Capital (USA) Inc. as its financial advisor and Potter Anderson & Corroon LLP as its legal counsel. Macquarie and the law firm will evaluate the acquisition offer “as well as any potential strategic alternatives to the proposal.” Bally’s did not say if other suitors are bidding for the company, but it did describe the publicized offer as “preliminary” and “non-binding.”

The Special Committee cautions Bally’s stockholders and others considering trading the company’s securities that no decisions have been made with respect to the proposal,” according to a statement.

In a late January Form 13/D filing with the Securities and Exchange Commission (SEC), Standard General — the hedge fund that’s Bally’s largest shareholder — revealed a takeover offer for the gaming company, valuing it at just over $2 billion.

Bally’s Committee Sans Kim

Standard General is controlled by Soo Kim, a member of Bally’s board. In the aforementioned regulatory filing, the hedge fund says it will not pursue the deal unless it’s approved by a special committee.

That committee is comprised of “independent and disinterested directors,” implying Kim isn’t a member of that group. However, he is Bally’s chairman of the board. The casino operator’s board of directors has nine members, three of which are described as “independent” on the company’s website.

Bally’s CEO Lee Fenton is also a director. That could be a relevant fact because he previously led UK-based Gamesys. 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, indicating investors from that company might view Standard General’s bid for Bally’s as a lowball offer.

There is talk among analysts that cover Bally’s that the hedge fund’s proposal is more of a starting point and that the offer could be raised.

However, a higher bid hasn’t been publicly revealed as of yet, nor has the casino company’s stock traded up to $38. It resides at $35.20 at this writing.

Bally’s Could Remain as Is

It’s possible Standard General raises its offer, or that another suitor emerges. But for now, those scenarios are just speculation.

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 the gaming operator in the statement.

Bally’s currently runs 14 casinos in 10 states and a horse racetrack in Colorado, as well as iGaming, daily fantasy sports (DFS), and sports wagering entities.