GGRAsia – Bally-Scientific Games merger fast forwarded to end-2014

Bally-Scientific Games merger fast forwarded to end-2014

Sep 22, 2014 Newsdesk Industry Talk, Latest News, Top of the deck

The schedule for the completion of the merger between Bally Technologies Inc and Scientific Games Corp has been brought forward, Bally Technologies announced.

“We now anticipate the transaction closing by the end of 2014,” chief executive Richard Haddrill wrote in a letter to the firm’s employees on Friday.

The deal schedule was revised after the two companies were able to already secure several regulatory approvals, Mr Haddrill explained.

Scientific Games, a specialist in lottery equipment and management, announced in August it was acquiring fellow gaming equipment maker Bally Technologies in a deal valued at US$5.1 billion.

The merger was initially scheduled to be closed in early 2015.

“On September 4, we officially kicked off our integration planning with two days of meetings in Las Vegas, which were attended by approximately 70 people from senior management, with about equal representation from Bally Technologies and Scientific Games,” Mr Haddrill wrote in the letter.

The Bally Technologies chief executive added: “To leverage best practices from both companies, we spent time this past week understanding our current-state processes and environment, and identifying the near-term integration opportunities and requirements.”

When the deal was announced, Scientific Games said the transaction was expected to be immediately accretive to its earnings per share and cash flow, providing US$220 million in annual cost savings and US$25 million in annual capital expenditure savings by the end of the second year following the closure of the deal.

Mr Haddrill noted however that it is ‘business as usual’ for Bally Technologies until the merger is completed. “We must bear in mind that until the closing, we remain separate companies and competitors,” he pointed out.

The casino equipment supply sector was surprised by a wave of mergers and acquisitions over summer. Besides the Bally Technologies-Scientific Games merger, other deals include the acquisition of Video Gaming Technologies Inc, International Game Technology and Multimedia Games Holding Co Inc by Aristocrat Leisure Ltd, GTech SpA and Global Cash Access Holdings Inc, respectively.

U.S.-based JCM Innovation Corp on September 2 announced it had finalised the acquisition of FutureLogic Inc.

Fitch Ratings Inc earlier this month said the consolidation in the market – often via leveraged deals – raised near- to medium-term credit risk, in a sector that has traditionally been “debt adverse”.