|[August 01, 2014]
Scientific Games to Acquire Bally Technologies in Transaction Valued at $5.1 Billion
NEW YORK & LAS VEGAS --(Business Wire)--
Scientific Games Corporation (Nasdaq: SGMS) ("Scientific Games") and
Bally Technologies (News - Alert), Inc. (NYSE: BYI) ("Bally") today announced that the
companies have entered into a definitive merger agreement whereby
Scientific Games has agreed to acquire all of the outstanding Bally
common stock for $83.30 in cash per share, which represents a 38 percent
premium to Bally's closing stock price on July 31, 2014. The aggregate
transaction value is approximately $5.1 billion, including the
refinancing of approximately $1.8 billion of existing Bally net debt.
The transaction was unanimously approved by the boards of directors of
the two companies.
"The acquisition of Bally provides us with a unique opportunity to
combine two exceptional companies with long track records of creating
leading-edge games and gaming technology products for players and
delivering innovative solutions to our customers," said Gavin Isaacs,
Scientific Games' President and Chief Executive Officer. "With leading
gaming, lottery, and interactive content, world-class systems
capabilities and table game offerings, we believe that the combined
company will be uniquely positioned as a strategic partner for gaming
and lottery operators, offering a highly diversified suite of
value-enhancing products and services across multiple worldwide
distribution channels and platforms."
"Having worked side-by-side with the talented teams at Bally and more
recently Scientific Games, I am confident this combination brings
together best-of-breed cultures and is occurring at a truly opportune
time as both companies are committed to bringing the highest value
products and services to customers," continued Mr. Isaacs. "The combined
company will feature world-class research and development capabilities,
an expanded base of recurring revenues and greater worldwide penetration
in key geographies, including the AustralAsia region. In addition to the
strategic value of the transaction to our customers, we expect to create
significant shareholder value as the transaction is expected to deliver
immediate earnings and cash flow accretion and will allow us to
meaningfully reduce our leverage over the next three to four years.
Reflecting both organizations' recent post-merger integration successes,
we have identified and expect to realize $220 million in annual cost
synergies and $25 million of annual capital expenditure savings by the
end of the second year following the closing of the transaction."
"The combination with Scientific Games will benefit our customers and
shareholders," said Richard Haddrill, Bally's Chief Executive Officer.
"Increased scale, geographic diversity and product development
capabilities will create a new runway of growth opportunities through
new products and a comprehensive portfolio of customer-focused
solutions. This transaction delivers immediate value to our
shareholders, and the highest share price in our history. We look
forward to working with our new colleagues at Scientific Games to
execute a detailed integration plan to realize customer satisfaction and
Expanded Portfolio and Improved Operating Efficiencies
The transaction would expand Scientific Games' portfolio of products and
solutions to include leading casino management systems and table
products, including automatic shufflers, proprietary table games and
electronic table systems. It would also expand the range of Scientific
Games' social and real-money iGaming and iLottery products and services.
This expanded portfolio is expected to position Scientific Games to
better cross-utilize content and technology across the lottery, gaming
and interactive sectors to propel future growth.
The combined company is expected to have world-class global sourcing,
production, engineering and product development capabilities, as well as
a large installed global base of diverse recurring revenue products and
services. Scientific Games and Bally generated combined revenue of
approximately $3.0 billion in the 12-month period ended March 31, 2014.
Scientific Games expects to achieve the anticipated $220 million of cost
synergies and $25 million of capital expenditure savings by
consolidating operations and generating efficiencies in the areas of
manufacturing, engineering, field and customer service and
administrative operations. Scientific Games anticipates incurring $75
million of costs to achieve the cost synergies and $40 million in
capital costs to complete the integration of the companies. In addition,
the combined company is expected to benefit from accelerated utilization
of various tax attributes against U.S.-based pre-tax income.
Scientific Games would acquire all of the outstanding shares of Bally
for $83.30 per share in cash, for a total transaction value of
approximately $5.1 billion, including net debt of approximately $1.8
billion. The acquisition would be financed with debt and cash on hand
and Scientific Games has obtained committed debt financing for the
transaction, which is not subject to a financing contingency.
The acquisition is subject to customary closing conditions, including
receipt of Bally shareholder approval and antitrust and gaming
regulatory approvals, and is currently expected to be completed in early
2015. Scientific Games and Bally are both licensed in more than 300
gaming jurisdictions worldwide, which is expected to help facilitate
obtaining the required gaming regulatory approvals.
Upon closing of the transaction, Mr. Isaacs will continue as President
and Chief Executive Officer of Scientific Games, and it is anticipated
that Mr. Haddrill and David Robbins, Chairman of the Board of Directors
of Bally, will join the board of directors of Scientific Games, with Mr.
Haddrill anticipated to serve as Vice Chairman.
Financial and Legal Advisory
BofA Merrill Lynch, Deutsche Bank Securities Inc. and J.P. Morgan served
as the financial advisors to Scientific Games and Cravath, Swaine &
Moore LLP served as the legal advisor to Scientific Games for the
transaction. BofA Merrill Lynch, .P. Morgan and Deutsche Bank
Securities Inc. provided the committed debt financing for the
transaction, and Latham & Watkins LLP served as the legal advisor to
Scientific Games for such financing.
Macquarie Capital served as lead financial advisor and Groton Partners
served as co-financial advisor to Bally and Skadden, Arps, Slate,
Meagher & Flom LLP served as the legal advisor to Bally.
Conference Call Details
Scientific Games management is hosting a conference call today, August
1, at 8:30 am EDT to review the proposed transaction. To access the call
live via a listen-only webcast, please visit www.scientificgames.com
and click on the webcast link under the Investors section. To access the
call by telephone, please dial (866) 318-8617 (U.S. and Canada) or +1
(617) 399-5136 (international). The conference ID is SGMS. A replay of
the webcast will be archived in the Investors section on our website.
A presentation that will be reviewed on the call will be available in
the Investors section on the Scientific Games website prior to the call.
A replay of the webcast and accompanying presentation will be archived
in the Investors section on the Scientific Games website.
About Scientific Games
Scientific Games Corporation (NASDAQ: SGMS) is a leading developer of
technology-based products and services and associated content for
worldwide gaming and lottery markets. The Company's portfolio includes
instant and draw-based lottery games; electronic gaming machines and
game content; server-based lottery and gaming systems; sports betting
technology; loyalty and rewards programs; and social, mobile and
interactive content and services. For more information, please visit: www.scientificgames.com.
About Bally Technologies
Founded in 1932, Bally Technologies (NYSE: BYI) provides the global
gaming industry with innovative games, table game products, systems,
mobile, and iGaming solutions that drive revenue and provide operating
efficiencies for gaming operators. For more information, please visit http://www.ballytech.com.
Connect with Bally on Facebook,
This press release includes "forward-looking statements" within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements describe future expectations, plans, results
or strategies and can often be identified by the use of terminology such
as "may," "will," "estimate," "intend," "plan," "continue," "believe,"
"expect," "anticipate," "estimate," "should," "could," "potential,"
"opportunity," or similar terminology. These statements are based upon
management's current expectations, beliefs, assumptions and estimates
and are not guarantees of timing, future results or performance.
Similarly, statements herein that describe the proposed transaction,
including its financial impact, and other statements of management's
expectations, beliefs, assumptions, estimates and goals regarding the
proposed transaction are forward-looking statements. It is uncertain
whether any of the events or results anticipated by the forward-looking
statements (including consummation of the proposed transaction) will
transpire or occur, or if any of them do, what impact they will have on
the results of operations and financial condition of the combined
company or the price of Scientific Games' or Bally's stock. These
forward-looking statements involve certain risks and uncertainties and
other factors that could cause actual results to differ materially from
those indicated in such forward-looking statements, including but not
limited to: uncertainties as to the timing of the consummation of the
proposed transaction and the ability of the parties to consummate the
proposed transaction; the satisfaction of the conditions precedent to
consummation of the proposed transaction, including the approval of
Bally's stockholders; the ability to obtain required regulatory and
gaming approvals at all or in a timely manner; the ability to obtain the
debt financing necessary to consummate the proposed transaction;
litigation related to the proposed transaction; disruption of Bally's or
Scientific Games' current plans and operations as a result of the
proposed transaction; the ability of Bally or Scientific Games to retain
and hire key personnel; competitive responses to the proposed
transaction; unexpected costs, charges or expenses resulting from the
proposed transaction; the ability of Scientific Games to successfully
integrate Bally's operations, product lines and technology; the ability
of Scientific Games to implement its plans, forecasts and other
expectations with respect to Bally's business after the completion of
the transaction and realize additional opportunities for growth and
innovation; the ability of Scientific Games to realize the anticipated
synergies from the proposed transaction in the anticipated amounts or
within the anticipated timeframes or costs expectations or at all; the
ability to maintain relationships with Scientific Games' and Bally's
respective employees, customers, other business partners and
governmental authorities; and the other risks, uncertainties and
important factors contained and identified (including under the heading
"Risk Factors") in Scientific Games' and Bally's filings with the
Securities and Exchange Commission (the "SEC (News - Alert)"), such as their respective
Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current
Reports on Form 8-K, any of which could cause actual results to differ
materially from the forward-looking statements. The forward-looking
statements included in this press release are made only as of the date
hereof and, except for Scientific Games' and Bally's ongoing obligations
under U.S. federal securities laws, neither Scientific Games nor Bally
undertakes any obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.
Bally is responsible for the information in this press release
concerning Bally and Scientific Games is responsible for the information
in this release concerning Scientific Games. Readers are cautioned not
to place undue reliance on any of these forward-looking statements.
Non-GAAP Financial Measures
Combined revenue as used herein is a non-GAAP measurement that is
presented herein as a supplemental disclosure. As used herein, combined
revenue reflects the arithmetic sum of Scientific Games' pro forma
revenue (giving effect to the acquisition of WMS Industries (News - Alert) Inc.) and
Bally's pro forma revenue (giving effect to the acquisition of SHFL
entertainment, Inc. and Dragonplay Ltd.) for the trailing 12-month
period ended March 31, 2014. As used herein, combined revenue does not
represent a "pro forma" amount determined in accordance with the SEC's
rules and regulations, including Article 11 of Regulation S-X, does not
reflect any pro forma adjustments resulting from the proposed
transaction, and should not be taken to represent how the companies
would have performed on a historical basis had the acquired operations
been included in the period presented, or how the companies will perform
in any future period. This non-GAAP financial measure, as well as the
other information in this press release, should be read in conjunction
with Scientific Games' and Bally's financial statements filed with the
Additional Information and Where to Find It
This communication is being made in respect of the proposed transaction
involving Bally and Scientific Games. Bally intends to file with the SEC
a proxy statement in connection with the proposed transaction with
Scientific Games. Bally also intends to file with the SEC other
documents regarding the proposed transaction. The definitive proxy
statement will be sent or given to the stockholders of Bally and will
contain important information about the proposed transaction and related
matters. BALLY'S SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT
REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The
proxy statement and other relevant materials (when they become
available), and any other documents filed by Bally with the SEC, may be
obtained free of charge at the SEC's website, at www.sec.gov.
In addition, security holders of Bally will be able to obtain free
copies of the proxy statement from Bally by contacting Investor
Relations by mail at Attn: Investor Relations, Bally Technologies, 6650
El Camino Road, Las Vegas, NV 89118.
Participants in the Solicitation
Scientific Games and Bally and their respective directors and executive
officers and other persons may be deemed to be participants in the
solicitation of proxies in connection with the proposed merger.
Information about Scientific Games' directors and executive officers is
included in Scientific Games' Annual Report on Form 10-K for the year
ended December 31, 2013 filed with the SEC on March 17, 2014 and the
proxy statement for Scientific Games' 2014 annual meeting of
stockholders, filed with the SEC on April 30, 2014. Information about
Bally's directors and executive officers is included in Bally's Annual
Report on Form 10-K for the fiscal year ended June 30, 2013 filed with
the SEC on August 28, 2013 and in the proxy statement for Bally's 2013
annual meeting of stockholders, filed with the SEC on October 28, 2013.
Additional information regarding these persons and their interests in
the merger will be included in the proxy statement relating to the
proposed merger when it is filed with the SEC. These documents can be
obtained free of charge from the sources indicated above.
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