Bally’s continued its M&A extravaganza on Wednesday with a $2.8 billion bid for UK online gaming company Gamesys Group.
Gamesys announced the offer Wednesday morning, saying the respective company boards had reached an agreement in principle.
Under the proposed terms, Bally’s would acquire all outstanding shares of Gamesys at 1,850p ($25.37) a share.
That equates to around $2.8 billion, and a 13% premium to the Gamesys share price at close yesterday. It also marks a 39% premium to the Gamesys share price when talks first began on January 25.
The operator posted revenue of just under $1 billion last year, with more than $300 million in EBITDA.
What’s the deal rationale?
Gamesys is one of the leading online bingo and casino operators in the UK and globally. It has a small footprint in the US where it runs Virgin Casino and the Tropicana online casino in NJ.
Crucially it owns proprietary online gaming technology:
“Bally’s would benefit from Gamesys’ proven technology platform, expertise and highly-respected and experienced management team across the online gaming field,” Bally’s said. “The combined group would be well positioned to capitalise on the full range of opportunities present both in the US and beyond.”
Bally’s said it would use the in-house technology platform to further build out its iGaming offering.
What’s in it for Gamesys?
Gamesys said the deal would give it market access in key states across the US.
Gamesys CEO Lee Fenton would also become the top executive of the combined group, perhaps reflecting Bally’s online focus.
“From our first meeting to now it has been the entrepreneurial energy of the two businesses that has brought us to the edge of creating a uniquely powerful company. Our shared passion and vision to capitalise on technology disruption to better serve our customers, wherever they may be, should make for an exciting journey for our employees, customers and shareholders alike,” Fenton said.
Shareholders of 30% of Gamesys stock indicated they will vote to approve the deal.
Bally’s building an omni-channel giant
The move chimes with recent Bally’s transactions that aim to transform the business into a technology company. Bally’s current CEO, George Papanier, will remain a member of the board and run the retail casino business.
“We believe that this combination would mark a transformational step in our journey to become a leading integrated, omni-channel gaming company with a B2B2C business,” said Bally’s president Soo Kim.
The combined group would be headquartered in Rhode Island and retain its listing on the New York Stock Exchange under the ticker BALY.
Bally’s will fund the deal through debt and an equity capital raise. BALY was last up 4% following the announcement.
Bally’s not done yet?
In recent months, Bally’s has undergone a dramatic transformation. First, it rebranded from Twin River after acquiring the brand name and the Bally’s property in Atlantic City.
Then it acquired platform Bet.Works for $125 million to power the coming launch of Bally Bets. It also scooped up the naming rights to more than 20 regional sports networks in a separate deal with Sinclair Broadcast Group.
From there, Bally’s bought DFS firm Monkey Knife Fight (MKF) for up to $90 million in stock. It then added free-to-play games provider SportCaller for another $40 million.
It also recently tried to buy World Poker Tour for $90 million.
How to bring it all together
Integrating that haul will be a challenge, but Bally’s might not be done yet.
Today’s statement noted the combined group would be highly cash-generative, enabling it to “pursue growth opportunities through strategic M&A.”
The company has announced itself as a major player in US sports betting, even before launching its first product.
