The US-based Bally’s Corporation and UK-based Gamesys have agreed on definitive terms for the combination of the businesses that was announced last month.
The deal is expected to create a leading business in the US land-based and online gambling markets and beyond.
What the deal looks like now?
Under Rule 2.7 of the UK Takeover Code, Bally’s Corporation will acquire Gamesys’ issued and outstanding share capital via its wholly-owned subsidiary, Premier Entertainment.
The merger will be carried out via a court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act.
Via Premier Entertainment, Bally’s will pay 1,850 pence per Gamesys share, representing a 14.4% premium of Gamsys’ closing share price of 1,642 pence per share on 23 March, the day before the announcement that there talks of a merger.
The price also represents a 41.2% premium on Gamesys’ closing share price of 1,330 pence on 25 January, the day before Bally’s made its initial proposal to acquire the UK-based business.
Neil Goulden, Chairman of Gamesys, said: “The combination would give unique optionality to Gamesys shareholders. The recommended cash offer, including the Gamesys FY20 dividend, provides a 41.2% premium to the Gamesys share price at the time of the original proposal from Bally’s and is at a significant premium to the all-time high Gamesys share price prior to the 2.4 announcement.
“However, should Gamesys shareholders wish to invest in a business with a strong foothold in the high-growth US gambling market combined with established markets in the UK and Japan, they can elect for part or all of their holding to be converted into Bally’s shares.”
As outlined in the terms when the deal was first announced, Gamesys shares will have the option to swap each share for 0.343 Bally’s Corporation shares.
Gamesys’ electing directors and shareholders have chosen this option for all of their stakes, with the expectation of finance director Michael Mee, who will exchange his holdings for a mixture of shares and cash.
If these shareholders are the only ones to opt for the share exchange offer, the maximum cash consideration to be paid by Bally’s would be £1.6bn
Soo Kim, Chairman of Bally’s Corporation, said: “We believe that this combination will mark a transformational step in our journey to become a leading integrated, omni-channel gaming company with a B2B2C business. We think that Gamesys’ proven technology platform alongside its highly respected and experienced management team, combined with the US market access that Bally’s provides, should allow the combined group to capitalize on the signiﬁcant growth opportunities in the US sports betting and online markets.
“We are truly excited about the opportunities that this combination would oﬀer and the enhanced and comprehensive experience and product oﬀering that it would enable us to oﬀer our customers.”
Gamesys chief executive Lee Fenton, added: “After more than two decades honing our craft in online gaming, this combination would give all at Gamesys an opportunity to fully leverage the technology, product and know-how we have developed in what will become the largest regulated online gambling market in the world.
“I believe the highly complementary nature of our companies and the common history of being highly cash generative will leave us uniquely positioned for success.”
In its Rule 2.4 announcement, Bally’s explained that the deal would allow it to significantly increase its market share of the US gambling market, which analysts predict could be worth up to $45bn at maturity.
Gamesys’ existing platform will benefit from receiving market access in states via Bally’s land-based portfolio of properties. Meanwhile, Bally’s will benefit from Gamesys’ expertise in the online gambling space.
There is not expected to be any material change to the number of employees at Gamesys, working conditions, or core duties of workers. However, as the business will be de-listed from the London Stock Exchange, some functions in its head office may not be required in the future.
The deal will also see Lee Fenton become group chief executive meanwhile Gamesys’ chief operating officer Robeson Reeves and non-executive director Jim Ryan will join the Bally’s board.
Bally’s current CEO, George Papanier will remain in charge of the land-based operation and remain on the board.
To finance the cash portion of the deal, Premier Entertainment has entered into a commitment letter and interim facilities agreement (IFA) for a bridge loan.
The loan will be provided by Deutsche Bank’s London Branch, Goldman Sachs and Barclays Bank.
The operator will also look to reduce the sum it borrows through an offering of common stock and tangible equity units for a total price the public of $850m. This will be carried out before the deal is completed.
The deal still needs approval
The transaction is still subject to approval from Gamesys shareholders at a court meeting and general meeting. It must be approved by investors holding at least 75% of the company’s stock.
Gamesys shareholders that hold 33.3% of the business have already said they will support the deal.
The issuance of new Bally’s shares to fulfill the share portion of the purchase will also need to be approved by shareholders. The board of directors has unanimously recommended supporting the proposals.
So far, shareholders that possess 2.5% of the business’ stock have said they will vote in favour of this.
Another big deal for Bally’s
Bally’s has been hard at work expanding its presence in the US gambling space in recent months.
Earlier this month, Bally’s completed its acquisition of the MontBleu Resort Casino & Spa in Nevada from Caesars Entertainment.
Last month, the land-based operator also completed its $90m acquisition of the US-based daily fantasy sports provider, Monkey Knife Fight.
In February, Bally’s agreed on a deal to acquire the free-to-play games business SportCaller. An
SportCaller supplies trivia, predictions, pay-to-play, and custom free-to-play content to a range of media businesses and sportsbook operators around the globe.
Once the acquisition is complete, SportCaller will form part of Bally’s interactive division, which was formed after the casino operator acquired Bet.Works in November last year.