Scientific Games has agreed to pay $5.1bn, including debt, to buy rival slot-machine maker Bally Technologies in the latest multibillion-dollar effort to consolidate the global gaming industry.
Scientific Games, controlled by billionaire investor Ronald Perelman, will pay $83.30 in cash per Bally share, valuing the equity at $3.3bn and representing a premium of 38 per cent above Bally’s closing share price on Thursday.
The deal comes just two weeks after Italy’s Gtech agreed to acquire International Game Technology in a $4.7bn cash deal that created the world’s largest slot-machine maker, and reflects the pressure faced by an industry that depends heavily on the spending of low-income Americans.
Gavin Isaacs, Scientific Games’ chief executive, said that combining the two businesses would generate annual cost synergies of $220m and around $25m of annual capital expenditure savings, both to be realised two years after the deal closes.
The deal would unite “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,” he added.
Shares in Bally jumped 29.1 per cent to $77.70 by close of New York trading, while shares in Scientific Games rose 2.8 per cent to $8.78.
Gambling groups have been expecting more consolidation as growth rates slow, and new taxes and regulations come in to force. The sector is also having to adjust as gamblers increasingly migrate to the internet to place their bets.
Brian Mattingley, chief executive of 888, said earlier this year: “The bigger the player, the more resilient that player can be. There will be some casualties and there will be some consolidation. The bigger ones will get bigger and that’s not such a bad thing.”
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