Bally’s Corporation has announced plans to merge with Standard General’s affiliate Queen Casino & Entertainment Inc. (QC&E), which owns four casino properties and has an ownership stake in Itralot SA, a global lottery management company.
Shares of Bally’s jumped 25% following the announcement Thursday, with shareholders set to receive $18.25 per share, a 35% percent premium over Wednesday’s closing price. Bally’s shareholders can receive a cash payment or elect to maintain all or a portion of their shares in the merged company.
The deal is expected to close in early 2025, pending regulatory approval.
“The addition of four complementary properties through this merger to our existing 15 domestic casino properties will add further geographic and market diversity to our portfolio," Bally’s CEO Robeson Reeves said, "With QC&E’s development pipeline recently completed or already well underway we see a path toward additional revenue and EBITDAR growth and value accretion as those projects are completed in 2025.
"We look forward to bringing our ultimate vision to bear and to working closely with the Stand General team to execute on that vision.”
This wasn't Standard General’s first attempt to acquire all the outstanding shares in Bally’s, with its first offer being rejected by the board in May 2022. In March, Standard General offered $15 per share for the regional casino company. Bally’s retained Macquarie Capital to help evaluate Standard General’s proposal.
Perseverance pays off
Standard General already had a relationship with Bally’s. In 2016, the hedge fund took an ownership stake in Twin River Worldwide Holdings, which would later become Bally's. Standard General’s principal partner, Soohyung Kim, got a seat on the casino company’s board, ultimately becoming its chairman in 2019. The company went public soon after.
Although Bally’s was always a growth story, it kicked into overdrive during the pandemic. In 2020, Bally’s acquired three casinos from Eldorado Resorts – the Isle of Capri in Kansas City, the Lady Luck in Vicksburg, and the Eldorado Shreveport. Eldorado needed to sell the properties to appease regulators during its own merger with Caesars Entertainment.
Soon after, the company acquired the Bally’s brand name from Caesars, along with Bally’s Atlantic City Casino. Bally's acquired even more casinos the following year and now owns 15 across 10 states.
Bally’s challenging interactive acquisitions
Bally’s didn’t, however, only acquire casino properties; it also bought up online gaming and sports betting businesses.
In 2021, Bally's acquired SportCaller, a free-to-play games provider. It also acquired the third-largest daily fantasy sports company, Monkey Knife Fight. That same year, it bought Bet.Works for $125 million and Gamesys Group for $2.7 billion.
But the company may have bit off more than it could chew on the interactive front.
Last year, Bally’s shut down Monkey Knife Fight after it couldn’t find a buyer for the flagging company. It also laid off 15% of its interactive staff.
In a letter to employees, then-CEO Lee Fenton noted the unsustainability of the company’s high employment levels. “The pandemic boosted our business and we continued to hire at full pelt. I now can see that we may have over hired in some areas and I take full responsibility for that.”
Bally’s also shut down its online sports betting service Bally Bet, spending months to retool its operations.
This year, Bally’s has continued to struggle. Its Q1 2024 earnings were softer than analysts expected, pressuring its share price. The company, however, reaffirmed its full-year 2024 guidance, with Reeves offering an optimistic outlook in the recent merger announcement.
“Our team is well positioned to continue to execute on our initiates to drive growth across all our segments, including our international interactive business, North America Interactive and our Casinos & Resorts segments, while preceding with our development pipeline, including construction of our permanent casino resort in Chicago for which we recently announced a comprehensive financing plan,” Reeves said.
Investors will have a chance to see just how well Bally’s is performing when it reports its Q2 2024 financial results on July 31.
