Bally’s Rejects Standard General Takeover Bid, Considers Buying $500M in Stock

Shares of Bally’s (NYSE:BALY) are trading somewhat let down Thursday after the regional cassino operator rejected a $38 per portion out takeover tender from hedging monetary fund Standard General — its largest investor.

Launched in January, the proposition precious the Rhode Island-based gaming companion at most $2 billion. At the clip of the offer, some analysts speculated Standard General, or perhaps another suitor, would add up forward with a higher offer for Bally’s. Additionally, in that location were concerns Gamesys executives that joined Bally’s when the latter acquired the former inward 2021 would balk at the bid price. That’s because it was depress than the damage at which they received equity in the gaming company.

While Bally’s offered hard cash for Gamesys, at that place was an choice for the latter to obtain shares inward the buyer. When the sell closed, Bally’s gunstock was trading at over $50. It later tumbled and ne'er bang the $38 Standard General offered, indicating Gamesys executives were potential reluctant to sell at deeply discounted levels.

Bally’s caudex is down feather 21% year-to-date and resides below $30 today. But leadership believes compelling opportunities are afoot.

The fellowship has real substantive opportunities before it, including the integrating of the Gamesys acquisition, the build-out of Bally’s Second Earl of Guilford American interactive stage business and the continued strategic elaboration of our land-based step inwards the U.S. With these opportunities in front end of us, we have outstanding trust inwards the time to come as we go forward,” said CEO Lee Fenton in a statement.

Standard General beginner Soo Kim said he’s disappointed inward the outcome but adds his investiture stiff intends “to remain a supportive, long-term investor in the company.”

Bally’s Buyback

Perhaps sensing an chance to purchase some of its beat-up shares at a discount, Bally’s proclaimed a pinnace offer for $300 zillion to $500 zillion of its stock.

“Bally’s simultaneously proclaimed that its board of directors dictated that Bally’s should follow up on initiating a hard cash tenderize tender for its shares. It is hoped-for that the ship's boat offering testament involve $300 one thousand thousand to $500 million, and will follow structured in a Dutch people auction sale format,” the accompany said inward the statement.

The Dutch auctioneer methodological analysis is different than repurchasing shares on the open market. In a Dutch people auction, the cost of what’s being sold is set past accounting for all bids to get in at the highest price. Other gaming companies successfully rock-bottom shares prominent tallies via Dutch auctions in recent months.

“We eyeshot this as a positive degree outcome for the shares,” said Stifel psychoanalyst Jeffrey Stantial inwards a note to clients.

He rates Bally’s stockpile a “buy,” with a $56 terms target.

What’s Next for Bally’s

While the stride of consolidation and other transactions remains brisk up in the gaming industry, it’s not clean-cut if another wooer testament emerge for Ballly’s. It’s also incertain what the necessary damage is to oblige direction to go for a takeover offer.

For now, the keep company could opt to centering on its Frederick North American interactive concern and stemming losses inwards that business. The operator reported first-quarter results today with earnings before interest, taxes, depreciation, amortization, and restructuring or split costs (EBITDAR), and revenue missing Wall Street forecasts.

Bally’s North America interactive surgical procedure lost $19 meg in the March quarter, to a greater extent than doubled the red in the prior quarter.

“Nonetheless, $19M marks a large sequential increase from the $9M invested inwards Q4, and seems to evoke management’s prior $60M direction for FY22 may need to impulsion higher,” adds Stifel’s Stantial.