Standard General, the hedge-fund led by Bally chairman Soo Kim has finally succeeded after several failed attempts in purchasing the casino operator. The company’s valuation is $4.6bn in the deal announced Thursday (25th July).
Bally’s announced in a press release that Standard General would acquire the outstanding shares of Bally’s for $18.25 each. This figure is 71% higher than the volume-weighted 30-day average share price as of 8th March. This was the final trading day before the announcement by the company of the previous $15 offer per share.
Hedge funds are also contributing $500 million to facilitate this deal.
Soo Kim said that the purchase “provides Bally stockholders with an important cash premium, along with the certainty of their investment, or the chance to take part in our longer-term development prospects and expanded portfolio.”
Bally CEO Robeson Reeves said that Bally is in a “good position to implement our growth initiatives”. This includes the company’s interactive as well as land-based business, he said.
Truist’s Barry Jonas disagrees – he issued an analyst report following news that Bally’s shares were downgraded to “hold”. Bally’s shares were trading at $70 a share in March 2021, before they began to fall. Jonas attributed the decline to “an ineffective NA Interactive strategy” as well as leadership changes and high leverage (6.3% net debt on EBITDAR 2025E).
This company has diversified into multiple markets. It is involved in a retail casino resort in Chicago and the Major League Baseball A’s Casino in Las Vegas.
Bally’s expands its portfolio with 19 new casinos after merging with QC&E
Bally’s and The Queen Casino and Entertainment, a regional operator owned by Standard General as well, will merge under the terms of this buyout. QC&E has four casinos across three states. QC&E’s portfolio includes DraftKings in East St Louis (Illinois), the Queen Marquette casino in Marquette (Iowa), the Queen Baton Rouge in Louisiana, and the Belle of Baton Rouge in Louisiana.
Bally’s operates a casino already in Shreveport, thanks to a recent agreement with the real estate investment trust Gaming and Leisure Properties. Standard General has agreed to a deal that will see the company owning and/or operating three of the twenty licensed casinos within the state.
By adding Bally’s assets, the combined company operates 19 gaming establishments in 11 different states. The company will continue to be publicly traded. The option for shareholders to keep their shares will be available through the rollover elections.
Sinclair Broadcast Group, and Noel Hayden have already decided to rollover their shares. This means that at least 47% Bally shares outstanding will be transferred to the new firm.
It is anticipated that the deal will close during the first half 2025. Bally’s has said that Q2 results will be published on or before the 31st July, but they won’t comment on this deal during their investors call at the end of August.
Third attempt at a buyout is successful
Standard General’s third offer to Bally’s was accepted in three years. Standard General’s first offer to Bally’s was $38 per share, in January 2022. Bally’s refused that offer shortly thereafter. Lee Fenton, the CEO at that time, said there were “substantial” opportunities for Bally’s.
In March, the company’s shares dropped steadily for the next two years. Bally’s created a committee that would evaluate the proposal. The committee ultimately decided that now was the right time to accept this buyout.
Jaymin Patel said that he, as chairperson of the standard general committee, “determined that the consideration in cash from Standard General provides a meaningful value and an immediate benefit to the stockholders”.
Bally’s to move forward with Chicago and Las Vegas development
Bally’s has had a busy and productive month. The company made a big announcement on 12th July with GLPI, announcing a deal that would fund GLPI to the tune of $2.075 billion. Ninety-four million dollars will be used to build the Bally’s Chicago Casino project. Bally’s casino will begin leasing the real estate at $20m/year. GLPI purchased the land for the project’s construction costs of $250m.
Bally’s Kansas City, Bally’s Shreveport and other Bally’s casinos will be sold and leased back for $395m. Rents for these properties start at around $32.2m per year. GLPI has the option to purchase and lease the Bally’s Twin River Lincoln Casino, in Rhode Island. The price will be $735 million by 2026. Rents would start at $58.8m per year.
Bally’s now has the funding for Chicago in place and is able to move forward. Officials of the company had previously stated that it was facing a $800m funding gap for the project. This drew harsh criticism. At one time, Chicago Mayor Brandon Johnson expressed doubts about Bally’s abilities to close the deal. Now, the project appears to be on schedule to open by the fall 2026.
Tropicana also makes progress
Bally’s will also demolish the Tropicana Las Vegas in addition to Chicago.
Bally’s filed a permit application with Clark County on 11 July to demolish the property. The Las Vegas Review-Journal reports that the application specifies a tentative timeframe between 30 September to 8 October. Bally’s will purchase the Tropicana’s operations in 2021, for $148m. GLPI is the owner of the 35-acre parcel on which the Tropicana rests.
The A’s of Oakland will start construction after the demolition and finish the stadium by 2028. It is estimated to cost $1.5bn. Nine of the 35-acre site will be devoted to the stadium. Bally’s gave up the casino for the right to build a casino resort on the remaining land.
Bally’s Chicago has been operating for two years by the time Bally’s Chicago is completed. If the returns from GLPI are positive, further collaboration could be feasible. Bally’s Temporary Casino at Medinah Temple posted an adjusted gross revenue of $62.7m so far in this year. This is the fourth highest total for the entire state.
Bally’s has also made a significant commitment to New York where it was one of 11 bidders who competed for three casino licenses in the downstate area.
Bally’s digital platform Bally Bet was launched in New York, in July 2022. Bally’s has since signed a contract with New York for a lease on the old Trump Golf Links located in the Bronx. The agreement is set to last 20 years. This lease will cost the company $60m. Bally’s has a plan to turn 17 out of 192.5 acres into a casino.
New York will select three licensees by 2025.
