ShareBally's largest stakeholder offered to purchase the company's remaining 42.96 million shares for a valuation of $38 per share before making the firm private. In its Tuesday bid to acquire the business, the Standard General hedge fund put up an estimated $2.07 billion value to purchase the firm.
Like many other gaming businesses, Bally's stock has been declining. When investors were enthusiastic about online gaming in March, the stock traded in the $70s. However, Bally's shares were only $27 last week. Following the news, things have changed, resulting in a 27 percent rise in the company's share.
In a letter to the operator's board of directors, Standard General detailed its plan. Soo Kim, a co-founder and current head investment officer of the hedge fund, stated the proposed deal would allow the company's owners to obtain an outstanding cash value right away and give them confidence about the importance of their shares. It becomes crucial given the operational risks inherent in the company's industry and the market risks associated with remaining public firms.
Pending Approval
Nonetheless, Bally has yet to respond to the proposal; the deal would not proceed unless ratified by the company's board of directors. Standard General stated in its letter that it wants Bally's to form a special committee of independent directors to review the offer and provide a report to the whole board. Standard General will still be a shareholder even if they can not strike a deal.The stock value of $2.07 billion would exceed Standard General's total assets under management (AUM), which was estimated to be $1.8 million in its latest regulatory filing. In his proposal, Kim indicated that he planned to use long-term financing methods such as sale and leaseback. The hedge fund would sell part or all of Bally's real estate assets and engage in a long-term rental deal with potential investors to raise immediate cash.
Bally's Corporation is located in Rhode Island and operates 14 casinos in 10 states. Besides the Colorado racetrack, the company also owns off-site betting licenses in 15 other states. Bally Interactive is in charge of the company's multiple online operations, such as the Bally Bet sports betting brand. Last year, it paid $2.7 billion to purchase a UK-based online gaming provider known as the Gamesys Group.
It also runs a fantasy sports site and a B2B gaming provider with free-to-play features. Bally's sales were $315 billion in the most recent quarter; however, the Corporation suffered a net loss of $14.7 million.
