NEW YORK and LAS VEGAS, Aug. 1,
2014 /PRNewswire/ -- Scientific Games Corporation (Nasdaq:
SGMS) ("Scientific Games") and Bally Technologies, Inc. (NYSE: BYI)
("Bally") today announced that the companies have entered into a
definitive merger agreement whereby Scientific Games has agreed to
acquire all of the outstanding Bally common stock for $83.30 in cash per share, which represents a 38
percent premium to Bally's closing stock price on July 31, 2014. The aggregate transaction value is
approximately $5.1 billion, including
the refinancing of approximately $1.8
billion of existing Bally net debt. The transaction
was unanimously approved by the boards of directors of the two
companies.
"The acquisition of Bally provides us with a unique opportunity
to combine two exceptional companies with long track records of
creating leading-edge games and gaming technology products for
players and delivering innovative solutions to our customers," said
Gavin Isaacs, Scientific Games'
President and Chief Executive Officer. "With leading gaming,
lottery, and interactive content, world-class systems capabilities
and table game offerings, we believe that the combined company will
be uniquely positioned as a strategic partner for gaming and
lottery operators, offering a highly diversified suite of
value-enhancing products and services across multiple worldwide
distribution channels and platforms."
"Having worked side-by-side with the talented teams at Bally and
more recently Scientific Games, I am confident this combination
brings together 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," continued Mr.
Isaacs. "The combined company will feature world-class
research and development capabilities, an expanded base of
recurring revenues and greater worldwide penetration in key
geographies, including the AustralAsia region. In addition to the
strategic value of the transaction to our customers, we expect to
create significant shareholder value as the transaction is expected
to deliver immediate earnings and cash flow accretion and will
allow us to meaningfully reduce our leverage over the next three to
four years. Reflecting both organizations' recent post-merger
integration successes, we have identified and expect to realize
$220 million in annual cost synergies
and $25 million of annual capital
expenditure savings by the end of the second year following the
closing of the transaction."
"The combination with Scientific Games will benefit our
customers and shareholders," said Richard
Haddrill, Bally's Chief Executive Officer. "Increased
scale, geographic diversity and product development capabilities
will create a new runway of growth opportunities through new
products and a comprehensive portfolio of customer-focused
solutions. This transaction delivers immediate value to our
shareholders, and the highest share price in our history. We look
forward to working with our new colleagues at Scientific Games to
execute a detailed integration plan to realize customer
satisfaction and additional value."
Expanded Portfolio and Improved Operating
Efficiencies
The transaction would expand Scientific Games' portfolio of
products and solutions to include leading casino management systems
and table products, including automatic shufflers, proprietary
table games and electronic table systems. It would also expand the
range of Scientific Games' social and real-money iGaming and
iLottery products and services. This expanded portfolio is
expected to position Scientific Games to better cross-utilize
content and technology across the lottery, gaming and interactive
sectors to propel future growth.
The combined company is expected to have world-class global
sourcing, production, engineering and product development
capabilities, as well as a large installed global base of diverse
recurring revenue products and services. Scientific Games and Bally
generated combined revenue of approximately $3.0 billion in the 12-month period ended
March 31, 2014.
Scientific Games expects to achieve the anticipated $220 million of cost synergies and $25 million of capital expenditure savings by
consolidating operations and generating efficiencies in the areas
of manufacturing, engineering, field and customer service and
administrative operations. Scientific Games anticipates incurring
$75 million of costs to achieve the
cost synergies and $40 million in
capital costs to complete the integration of the companies. In
addition, the combined company is expected to benefit from
accelerated utilization of various tax attributes against
U.S.-based pre-tax income.
Transaction Terms
Scientific Games would acquire all of the outstanding shares of
Bally for $83.30 per share in cash,
for a total transaction value of approximately $5.1 billion, including net debt of approximately
$1.8 billion. The acquisition would
be financed with debt and cash on hand and Scientific Games has
obtained committed debt financing for the transaction, which is not
subject to a financing contingency.
The acquisition is subject to customary closing conditions,
including receipt of Bally shareholder approval and antitrust and
gaming regulatory approvals, and is currently expected to be
completed in early 2015. Scientific Games and Bally are both
licensed in more than 300 gaming jurisdictions worldwide, which is
expected to help facilitate obtaining the required gaming
regulatory approvals.
Upon closing of the transaction, Mr. Isaacs will continue as
President and Chief Executive Officer of Scientific Games, and it
is anticipated that Mr. Haddrill and David
Robbins, Chairman of the Board of Directors of Bally,
will join the board of directors of Scientific Games, with Mr.
Haddrill anticipated to serve as Vice Chairman.
Financial and Legal Advisory
BofA Merrill Lynch, Deutsche Bank Securities Inc. and J.P.
Morgan served as the financial advisors to Scientific Games and
Cravath, Swaine & Moore LLP served as the legal advisor to
Scientific Games for the transaction. BofA Merrill Lynch,
J.P. Morgan and Deutsche Bank Securities Inc. provided the
committed debt financing for the transaction, and Latham &
Watkins LLP served as the legal advisor to Scientific Games for
such financing.
Macquarie Capital served as lead financial advisor and Groton
Partners served as co-financial advisor to Bally and Skadden, Arps,
Slate, Meagher & Flom LLP served as the legal advisor to
Bally.
Conference Call Details
Scientific Games management is hosting a conference call today,
August 1, at 8:30 am EDT to review the proposed transaction.
To access the call live via a listen-only webcast, please visit
www.scientificgames.com and click on the webcast link under the
Investors section. To access the call by telephone, please
dial (866) 318-8617 (U.S. and Canada) or +1 (617) 399-5136 (international).
The conference ID is SGMS. A replay of the webcast will be archived
in the Investors section on our website.
A presentation that will be reviewed on the call will be
available in the Investors section on the Scientific Games website
prior to the call. A replay of the webcast and accompanying
presentation will be archived in the Investors section on the
Scientific Games website.
About Scientific Games
Scientific Games Corporation (NASDAQ: SGMS) is a leading
developer of technology-based products and services and associated
content for worldwide gaming and lottery markets. The
Company's portfolio includes instant and draw-based lottery games;
electronic gaming machines and game content; server-based lottery
and gaming systems; sports betting technology; loyalty and rewards
programs; and social, mobile and interactive content and
services. For more information, please visit:
www.scientificgames.com.
About Bally Technologies
Founded in 1932, Bally Technologies (NYSE: BYI) provides the
global gaming industry with innovative games, table game products,
systems, mobile, and iGaming solutions that drive revenue and
provide operating efficiencies for gaming operators. For more
information, please visit http://www.ballytech.com. Connect
with Bally on Facebook, Twitter, YouTube, LinkedIn, and
Pinterest.
Company Contacts
Investor Relations:
Scientific Games:
Bill Pfund +1 847-785-3167
Vice President, Investor Relations
bill.pfund@scientificgames.com
Bally: Mike Carlotti +1
702-532-7995
Vice President of Treasury and Investor Relations
mcarlotti@ballytech.com
Media Relations:
Scientific Games: Mollie Cole +1 773-961-1194
Director, Corporate Communications
mollie.cole@scientificgames.com
Bally: Laura Olson-Reyes +1
702-532-7742
Senior Director, Marketing & Corporate Communications
lolson-reyes@ballytech.com
Bally: Mike Trask +1
702-532-7451
Senior Manager, Corporate Communications
mtrask@ballytech.com
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements describe future
expectations, plans, results or strategies and can often be
identified by the use of terminology such as "may," "will,"
"estimate," "intend," "plan," "continue," "believe," "expect,"
"anticipate," "estimate," "should," "could," "potential,"
"opportunity," or similar terminology. These statements are
based upon management's current expectations, beliefs, assumptions
and estimates and are not guarantees of timing, future results or
performance. Similarly, statements herein that describe the
proposed transaction, including its financial impact, and other
statements of management's expectations, beliefs, assumptions,
estimates and goals regarding the proposed transaction are
forward-looking statements. It is uncertain whether any of
the events or results anticipated by the forward-looking statements
(including consummation of the proposed transaction) will transpire
or occur, or if any of them do, what impact they will have on the
results of operations and financial condition of the combined
company or the price of Scientific Games' or Bally's stock.
These forward-looking statements involve certain risks and
uncertainties and other factors that could cause actual results to
differ materially from those indicated in such forward-looking
statements, including but not limited to: uncertainties as to
the timing of the consummation of the proposed transaction and the
ability of the parties to consummate the proposed transaction; the
satisfaction of the conditions precedent to consummation of the
proposed transaction, including the approval of Bally's
stockholders; the ability to obtain required regulatory and gaming
approvals at all or in a timely manner; the ability to obtain the
debt financing necessary to consummate the proposed transaction;
litigation related to the proposed transaction; disruption of
Bally's or Scientific Games' current plans and operations as a
result of the proposed transaction; the ability of Bally or
Scientific Games to retain and hire key personnel; competitive
responses to the proposed transaction; unexpected costs, charges or
expenses resulting from the proposed transaction; the ability of
Scientific Games to successfully integrate Bally's operations,
product lines and technology; the ability of Scientific Games to
implement its plans, forecasts and other expectations with respect
to Bally's business after the completion of the transaction and
realize additional opportunities for growth and innovation; the
ability of Scientific Games to realize the anticipated synergies
from the proposed transaction in the anticipated amounts or within
the anticipated timeframes or costs expectations or at all; the
ability to maintain relationships with Scientific Games' and
Bally's respective employees, customers, other business partners
and governmental authorities; and the other risks, uncertainties
and important factors contained and identified (including under the
heading "Risk Factors") in Scientific Games' and Bally's filings
with the Securities and Exchange Commission (the "SEC"), such
as their respective Quarterly Reports on Form 10-Q, Annual Reports
on Form 10-K and Current Reports on Form 8-K, any of which could
cause actual results to differ materially from the forward-looking
statements. The forward-looking statements included in this press
release are made only as of the date hereof and, except for
Scientific Games' and Bally's ongoing obligations under U.S.
federal securities laws, neither Scientific Games nor Bally
undertakes any obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.
Bally is responsible for the information in this press release
concerning Bally and Scientific Games is responsible for the
information in this release concerning Scientific Games. Readers
are cautioned not to place undue reliance on any of these
forward-looking statements.
Non-GAAP Financial Measures
Combined revenue as used herein is a non-GAAP measurement that
is presented herein as a supplemental disclosure. As used
herein, combined revenue reflects the arithmetic sum of Scientific
Games' pro forma revenue (giving effect to the acquisition of WMS
Industries Inc.) and Bally's pro forma revenue (giving effect to
the acquisition of SHFL entertainment, Inc. and Dragonplay Ltd.)
for the trailing 12-month period ended March
31, 2014. As used herein, combined revenue does not
represent a "pro forma" amount determined in accordance with the
SEC's rules and regulations, including Article 11 of Regulation
S-X, does not reflect any pro forma adjustments resulting from the
proposed transaction, and should not be taken to represent how the
companies would have performed on a historical basis had the
acquired operations been included in the period presented, or how
the companies will perform in any future period. This non-GAAP
financial measure, as well as the other information in this press
release, should be read in conjunction with Scientific Games' and
Bally's financial statements filed with the SEC.
Additional Information and Where to Find It
This communication is being made in respect of the proposed
transaction involving Bally and Scientific Games. Bally intends to
file with the SEC a proxy statement in connection with the proposed
transaction with Scientific Games. Bally also intends to file with
the SEC other documents regarding the proposed transaction. The
definitive proxy statement will be sent or given to the
stockholders of Bally and will contain important information about
the proposed transaction and related matters. BALLY'S
SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING
THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY
AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
The proxy statement and other relevant materials (when they become
available), and any other documents filed by Bally with the SEC,
may be obtained free of charge at the SEC's website, at
www.sec.gov. In addition, security holders of Bally will be
able to obtain free copies of the proxy statement from Bally by
contacting Investor Relations by mail at Attn: Investor
Relations, Bally Technologies, 6650 El Camino Road, Las Vegas, NV 89118.
Participants in the Solicitation
Scientific Games and Bally and their respective directors and
executive officers and other persons may be deemed to be
participants in the solicitation of proxies in connection with the
proposed merger. Information about Scientific Games'
directors and executive officers is included in Scientific
Games' Annual Report on Form 10-K for the year ended
December 31, 2013 filed with the SEC
on March 17, 2014 and the proxy
statement for Scientific Games' 2014 annual meeting of
stockholders, filed with the SEC on April
30, 2014. Information about Bally's directors and
executive officers is included in Bally's Annual Report on Form
10-K for the fiscal year ended June 30,
2013 filed with the SEC on August 28,
2013 and in the proxy statement for Bally's 2013 annual
meeting of stockholders, filed with the SEC on October 28, 2013. Additional information
regarding these persons and their interests in the merger will be
included in the proxy statement relating to the proposed merger
when it is filed with the SEC. These documents can be
obtained free of charge from the sources indicated above.
SOURCE Scientific Games Corporation