Jan. 25, 2022, 12:45 p.m. EST

Casino operator Bally’s stock soars 24% after hedge fund makes buyout offer

By Ciara Linnane

Bally’s Corp. stock soared 24% Tuesday, after the casino operator got a buyout offer from its biggest shareholder, hedge fund Standard General LP, which offered to acquire all of the company’s shares outstanding for $38 a share.

The price is a roughly 30% premium over the stock’s closing price Monday. The offer was made in a letter to Bally’s (NYS:BALY) board that was disclosed by Standard General in a regulatory filing. The investor owns more than 20% of the shares and said it would fund the deal via a combination of sale-and-lease back and other long-term financing.

The letter said it hopes the Bally’s board will create a special committee of independent directors to review the proposal and make a recommendation.

“Standard General will not move forward with the transaction unless it is approved by such a special committee,” the hedge fund wrote in the letter.

Providence, Rhode Island-based Bally’s has 14 casinos in 10 states, it owns and manages a horse racetrack in Colorado and has access to off-site betting licenses in 15 states, according to its website.

The company acquired global online gaming operator Gamesys Group last year, and owns Bally Interactive, a sports betting platform. It also owns Monkey Knife Fight, a fantasy sports site, as well as SportCaller, a B2B free-to-play game provider and Telescope Inc., which enables fans to engage with live events.

The company has 10,000 employees and operates more than 15,800 slot machines, 500 table games and 5,300 hotel rooms. 

In its most recent quarterly earnings, it posted a net loss of $14.7 million on revenue of $314.8 million, compared with income of $6.72 million and revenue of $116.6 million a year ago.

Bally’s roots go back to 1932, when Bally Manufacturing was created as part of a company called Lions Manufacturing that went on to develop pinball game machines, according to Gamblingsites.com. The company later moved into the slot machine business.

Bally later signed distribution agreements with the Japanese maker of the early arcade videogames “Pac-Man” and “Space Invaders.”

The company was a cquired by Hilton Hotels (NYS:HLT) in 1996 in an all-stock deal th at valued it at more than $2 billion, and was later spun off and acquired by Harrah’s Entertainment, which became Caesars Entertainment Inc. (NAS:CZR) .

In 2020, Standard General unit Twin River Worldwide Holdings acquired the rights to the Bally’s brand from Caesars and renamed it Bally’s Corp.

Bally’s shares are down 4% in the year to date, while the S&P 500 (S&P:SPX) has fallen 9%.

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