A New York-based hedge fund has sent stock prices flying after announcing a Bally’s takeover.
Standard General announced an offer to acquire the remainder of Rhode Island-based gaming and sports betting corporation Bally’s for $15 a share, sending stock prices up by 25%.
The hedge fund already owns 25% of Bally’s, but has now delivered a non-binding letter to iGB, which has been published in a US Securities and Exchange Commission (SEC) 13D filing.
Standard General’s offer would see them acquire the entire remainder of the company’s outstanding shares.
Their offer of $15-per-share is at a 41% premium to Bally’s Friday closing price of $10.55 on the NYSE. The company’s total market capitalisation is currently more than $600million.
Since the news was announced, Bally’s share price has soared 25.24% to $13.30.
In the offer letter, Standard General has outlined: “The proposed transaction would be subject to the approval of the board of directors of the company and the negotiation and execution of mutually acceptable definitive transaction documents.
“It is our expectation that the board of directors will appoint a special committee of independent directors to consider our proposal and make a recommendation to the board of directors.”
Bally’s Takeover Is Second Attempt By Standard General
This latest offer marks the second time Standard General has attempted a full Bally’s takeover bid. The hedge fund also tried to buy the company for $38 a share back in January 2022.
The difference in offered share price means Standard General now believes Bally’s to be 50% less valuable than it was two years ago.
At the time of the first bid, Bally’s was valued at more than $2bn (£1.48bn/€1.77bn). Soo Kim, chairman of Standard General, noted the $38 share price represented a premium of 30% on Bally’s closing share price of $29.27 on January 24, 2022.
It was an up and down year for Bally’s in 2023. But their reduced share price is a reflection of the company’s continuing struggles.
Despite operating costs falling by 8.7% to $2.34 billion in 2023, Bally’s still posted a pre-tax loss of $167.6m. This included $289.7m in other expenses, and was still a $454.5m improvement on 2022’s figure.
However, adjusted EBITDA slipped to $527.3m in 2023, a drop of 3.9%.
Light At The End Of The Tunnel For Bally’s?
The last year has seen huge change already for the sports betting company. In early 2023, Bally’s cut 15% of its North American interactive workforce.
The cost-cutting measure was followed by the announcement that Diamond Sports Group – who operate Bally’s branded TV sports networks – was close to bankruptcy.
But things got better for Bally’s throughout the year. New CEO Robeson Reeves joined in March, and steadied the ship.
Steps included outsourcing its sports betting tech stack to Kambi and White Hat Gaming. And in September, Bally’s moved into the UK igaming sector as it rolled out a branded online casino on Gamesys’ Megaways Casino site.
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