New York-based hedge fund Standard General has sent Bally's stock soaring by 25% this morning following an offer to acquire the remainder of the company for $15 a share.
Standard General, which already holds a 25% stake in Bally’s, delivered a non-binding letter seen by iGB, published in a US Securities and Exchange Commission (SEC) 13D filing.
The hedge fund has offered to acquire the entirety of the remainder of all outstanding shares of common stock not already owned by Standard General.
The $15-per-share offer is at a 41% premium to Bally’s closing price on Friday on the NYSE at $10.55. In total the company holds a market capitalisation of more than $600m. Following the news, Bally’s share price has jumped up 25.24% to $13.30.
The offer letter outlines that: “The proposed transaction would be subject to the approval of the board of directors of the company and the negotiation and execution of mutually acceptable definitive transaction documents.
“It is our expectation that the board of directors will appoint a special committee of independent directors to consider our proposal and make a recommendation to the board of directors.”
Second time’s a charm
The offer now represents the second time Standard General has made a full takeover bid for Bally’s. In January 2022, Standard General offered to buy the company for $38 a share, which means that the hedge fund now assesses the company as over 50% less valuable than it did two years ago.
At the time, the business was valued at more than $2bn (£1.48bn/€1.77bn). Standard General’s chairman, Soo Kim, noted that the $38.00 price represented a 30% premium compared to Bally’s closing share price of $29.27 on 24 January 2022.
In a mixed 2023 for Bally’s, the reduction in price reflects the company’s continued net loss. Accumulated total operating costs fell 8.7% to $2.34bn during 2023.
After including $289.7m in other expenses, this left a pre-tax loss of $167.6m, an improvement on $454.5m in 2022. However, adjusted EBITDA for 2023 slipped 3.9% to $527.3m.
A value price for Bally’s?
The past year saw several major developments for the company. Early in 2023, Bally’s announced it was cutting 15% of its North American interactive workforce to reduce costs. Then came the news that Diamond Sports Group, operator of the Bally’s branded TV sports networks, was close to bankruptcy.
However, as the year progressed, the situation brightened for Bally’s, under the leadership of new CEO Robeson Reeves, who joined in March.
Stand-out highlights included outsourcing its sports betting tech stack to Kambi and White Hat Gaming. In September, Bally’s also made the move into the UK igaming sector, rolling out Bally’s-branded online casino on Gamesys’ existing Megaways Casino site.
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