Bally’s Stock Surges After Investor Standard General Files Takeover Bid

Posted on: January 25, 2022, 08:04h. 

Last updated on: January 25, 2022, 10:12h.

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

Bally’s (NYSE:BALY) is easily the best-performing gaming stock in early trading Tuesday after hedge fund Standard General filed a takeover proposal valuing the casino operator at $38 a share.

Bally's
Standard General founder Soo Kim, seen in a photo composite, above. His hedge fund is offering to acquire Bally’s at $38 a share. (Image: New York Post)

That’s a more than 30 percent premium to where the shares closed on Monday. The offer has shares of the Rhode Island-based regional casino company higher by 21 percent on volume that’s already nearly triple the daily average at this writing.

In a Form 13/D filing with the Securities and Exchange Commission (SEC), Standard General — the hedge fund that’s Bally’s largest shareholder — said it delivered a non-binding letter to the board of directors. In the letter, it offers to acquire all of the outstanding equity of the gaming company it doesn’t currently own for $38 a share.

As described in the Proposal Letter, Standard General expects that the Board of Directors  of the Company will appoint a special committee of independent directors to consider its proposal and make a recommendation to the Board of Directors,” according to the filing. “Standard General will not move forward with the transaction unless it is approved by such a special committee.”

Standard General is controlled by Soo Kim, a member of Bally’s board.

Hunter Becomes the Hunted

Standard General has a reputation for taking long-term stakes in companies undergoing change. It has overseen Bally’s transformation from the small regional gaming outfit previously known as Twin River Worldwide Holdings (TRWH) to a company that now controls 14 gaming properties in 13 states. That includes marquee markets such as the Las Vegas Strip and the Atlantic City Boardwalk.

In its current form, Bally’s itself was built on acquisitions. It used deal-making to not only increase the size of its land-based casino portfolio but also to become a vertically integrated player with an in-house tech stack, iGaming, sports wagering, and fantasy sports assets, among others. Last October, the company closed its biggest deal to date — the $2.7 billion purchase of Gamesys, a UK-based online gaming firm.

Standard General may be sensing an opportunity, or that Bally’s is now undervalued following a recent downdraft that’s swept over gaming stocks. Entering today, the shares were off 23.2 percent year-to-date and 53.12 percent below the 52-week high.

“No assurances can be given that a transaction will be consummated.  The Proposal Letter provides that no legally binding obligation with respect to a transaction will exist unless and until mutually acceptable definitive documentation has been executed and delivered with respect thereto,” said the hedge fund in the regulatory document.

Standard General owns more than 20 percent of Bally’s shares outstanding.

Bally’s Expansion Plans

The hedge fund’s offer for Bally’s arrives as the gaming company has multiple expansion irons in the fire.

For example, the operator is among several pursuing an integrated resort license in Chicago. It’s also rumored to be interested in developing a New York casino and is awaiting final approval to launch its mobile sports wagering app in that state.

Given the company’s knack for finding attractively valued assets and ability to procure financing, there’s talk Bally’s will remain a player on the gaming industry acquisition stage.