New York hedge fund Standard General submitted a bid this week to take Bally’s private at $38 a share.
The bid, announced Tuesday, marked a 30% premium to Bally’s closing price on Monday.
It valued Bally’s at around $2 billion.
Blood in the water?
Analysts at Truist called the offer an “opportunistic move” amid the sell-off in gaming stocks.
“The $38 a share offer price is just 9x our 2023E EBITDA and would likely leave several minority shareholders underwater,” Truist said. “While it’s unclear to us if a deal gets done at $38, we see this as an opportunistic move by Standard General given the market continues to re-rate lower.”
Following the proposal, Bally’s ($BALY) was up 23% to $36 at the time of writing.
Who is the bidder?
Standard General is the hedge fund founded by Soo Kim, who is also Bally’s chairman. The fund already owned a 20% stake in Bally’s.
“Our proposed transaction would allow the Company’s stockholders to immediately realize an attractive value, in cash, for their investment,” said Standard General in its offer document.
“It provides stockholders certainty of value for their shares, especially when viewed against the operational risks inherent in the company’s business and the market risks inherent in remaining a public company.”
Risky business at Bally’s?
Bally’s does indeed face some uncertainty. The company made several bold moves for online betting and gaming recently, including:
- Acquired online casino and front-end technology via $3 billion Gamesys deal
- Took over a portfolio of regional sports networks from Sinclair
- Acquired DFS firm Monkey Knife Fight (MKF) for up to $90 million in stock
- Acquired free-to-play games provider SportCaller for another $40 million
How is Bally’s online business progressing?
The Bally Bet app is live in four states but rollout has been slow as the company integrates those acquisitions. Bally’s also has a license for New York sports betting, but has not yet launched.
Standard General said it would remain a shareholder regardless of whether the offer was accepted.
The fund also stressed this was an expression of interest only and it might withdraw or modify the proposal.
