- Legal States
Erik Gibbs January 26, 2022 2 min read
Bally’s Receives Takeover Offer 30% Greater than Its Valuation
Standard General must know something others don’t. The New York hedge fund has offered to purchase the shares it doesn’t already own of Bally’s Corp. at a $2.07-billion valuation. Standard General is managed by Soohyung Kim, Bally’s chairman.
Bally’s Mulls Buyout Bid
Standard General is the largest shareholder of Bally’s, holding 20% of the company. It has presented an offer to buy the remaining 42.96 million shares for $38.00. This represents a 30% premium over Monday’s closing price. Bally’s shares rose 24% on Tuesday morning after the announcement was made.
Bally’s operates and owns more than a dozen casino properties and recently waded into the sports betting pool. Kim stated that the proposed transaction would enable stockholders of the company to immediately realize an attractive cash value and provide stockholders with certainty for their shares. This is especially important when considering the operational risks inherent within the company’s business, as well as the market risks inherent in remaining public companies.
The equity value of $2.07 billion would surpass all assets under management (AUM) at Standard General, which listed $1.8 million AUM in its most recent regulatory filing. Kim stated in his proposal that he intended to finance the transaction via sale and leaseback and other long-term financing arrangements. The hedge fund would then sell some or all of Bally’s real property for an immediate cash injection and enter into a long-term agreement to rent properties back from the buyers.
Kim added in his proposal that the firm would not move forward unless Bally’s appointed a special committee composed of independent directors to review the offer. Standard General will remain an investor in the company even if a deal cannot be reached.
Gaming Industry Continues to Evolve
Bally’s shares have been dropping like many other gaming companies. The stock traded in the low $70s in March as investors were excited about online gaming. However, Bally’s shares were only $27 by last week. That suddenly changed following the announcement.
Standard General’s familiarity and understanding of Bally’s was evident in this inclusion in the offer. It said that it would not need to perform any due diligence, adding, “As a result of our long-term involvement with the company and its predecessor, we have a detailed understanding of Bally’s, its business and assets, which will enable us to move quickly to finalize a transaction.”
Bally’s hasn’t yet commented on the offer.