PROVIDENCE, R.I. - Bally's Corporation (NYSE: BALY) today announced a definitive merger agreement with Standard General L.P., the company's largest shareholder. Under the terms of the transaction, Bally's stockholders will receive $18.25 per share in cash, a 71% premium over the 30-day volume weighted average price as of March 8, 2024. This values Bally's at approximately $4.6 billion in enterprise value.
The deal also allows Bally's stockholders to remain invested through a rollover election. Those who choose this option will become stockholders in the combined entity, which results from Bally's merger with The Queen Casino & Entertainment Inc. (QC&E), a regional casino operator. The merger will expand Bally's Casino & Resorts segment to 19 facilities across 11 states and is expected to contribute to growth with several projects due for completion in 2025.
Jaymin Patel, Chairman of the Special Committee, emphasized that the cash consideration from Standard General provides immediate value to stockholders. Robeson Reeves, Bally's CEO, highlighted the growth potential in all business segments, including the integration of four QC&E properties, which aligns with the company's expansion strategy.
Soo Kim, Managing Partner of Standard General, remarked on the significant cash premium and the opportunity for stockholders to participate in the future growth of the expanded company's portfolio. At least 47% of Bally's outstanding fully-diluted equity interests are expected to roll over into the combined company, with commitments from Sinclair Broadcast (NASDAQ:SBGI) Group, Inc., and Noel Hayden.
The special committee, advised by independent financial and legal advisors, determined the merger to be in the best interest of Bally's and its stockholders, excluding Standard General, Sinclair, and Noel Hayden. Bally's Board of Directors approved the merger based on the committee's recommendation.
Standard General has secured $500 million of committed financing to support the merger. The transaction is subject to regulatory approvals and the approval of Bally's stockholders, with an expected closure in the first half of 2025.
Bally's will continue its regular financial reporting and is scheduled to release its Q2 2024 results by July 31, 2024.
Furthermore, Bally's Corporation has reported a 3% growth in its first-quarter revenues, amounting to $618 million. This growth was primarily driven by a 70% increase in its North America Interactive segment. Despite a 4% decline in the International Interactive segment, Bally's maintains its 2024 revenue guidance of $2.5 billion to $2.7 billion.
Bally's is focusing on expanding its presence in the UK and launching online sports betting. The company's iGaming market has performed well in New Jersey, Pennsylvania, and Rhode Island.
InvestingPro Insights
As Bally's Corporation (NYSE: BALY) enters a definitive merger agreement with Standard General L.P., investors are looking at a significant premium over recent trading prices. The offer of $18.25 per share represents a substantial markup from the previous close of $13.52. This move reflects a positive outlook on Bally's future, despite some financial challenges indicated by InvestingPro data and tips.
InvestingPro data reveals a market capitalization of $547.36M, which is modest relative to the enterprise value of the merger at approximately $4.6 billion. Notably, the company's P/E ratio stands at -1.3, with an adjusted P/E ratio for the last twelve months as of Q1 2024 at -1.98, suggesting that the company is not currently generating profits. Additionally, the revenue growth for the last twelve months was 7.05%, pointing to a steady increase in the company's top-line earnings.
InvestingPro Tips highlight that Bally's management has been actively buying back shares, which could be a sign of confidence in the company's value. Moreover, the stock has experienced a strong return over the last month, up 18.91%, potentially indicating investor optimism leading up to the merger announcement. However, it's important to note that analysts do not expect Bally's to be profitable this year, and the company operates with a significant debt burden. These factors may influence investor sentiment as they weigh the immediate premium against longer-term financial health.
For those interested in a deeper dive into Bally's financials and future projections, InvestingPro offers additional insights and metrics. Subscribers can access more detailed analysis, including further InvestingPro Tips that could prove invaluable during this merger process. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and discover the full range of 11 additional tips available at https://www.investing.com/pro/BALY to inform your investment decisions.
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