Bally's Forms Committee to Study Standard General's Proposed Company Takeover

On Jan. 25, Soohyung Kim, Bally Corp’s Chairman and managing partner of Standard General LP, made an offer to buy the remaining shares of Bally’s and take over the company.

To decide how to move forward, Bally’s Corp. has formed a special committee of independent and disinterested directors to evaluate the preliminary, non-binding proposal from Standard General.

Standard General’s Offer for Bally’s

Standard General is a New York-based investment firm that is one of Bally’s current major shareholders, owning about 20% of Bally’s shares. The offer from Standard General is for $38 a share, a premium of 30% to the company’s closing price on Jan. 24.

In a statement, Bally’s said: “There can be no assurance that any definitive offer will be made or accepted, that any agreement will be executed or that any transaction will be consummated.”

The reported buyout saw Bally’s Corp. stock surge in the wake of the news, increasing more than 20% at nearly $36 in early afternoon trading.

Bally’s Corp. Is forming the committee at Standard General’s request. Standard General mentioned it would not go forward with a deal unless it was approved by a special committee and said in an email to Bally’s that the transaction would be subject to a “non-waivable condition requiring the approval of holders of a majority of the shares of the Company not owned by Standard General or its affiliates.”

“Our proposed transaction would allow the Company’s stockholders to immediately realize an attractive value, in cash, for their investment and provides stockholders certainty of value for their shares, especially when viewed against the operational risks inherent in the Company’s business and the market risks inherent in remaining a public company,” Standard General said in a letter to the Bally’s Board of Directors.

Like others in gaming, Bally’s has seen its share price fall. In March, shares of its stock were trading in the low $70s with investors enthusiastic about the online gaming industry. Then in January, shares fell to $27.

More on Bally’s

Bally’s owns and operates 14 casinos across 10 states, a horse racetrack in Colorado and has access to 16 online sports betting licenses in 16 states. It continued to expand over the past year, acquiring Bet.Works, Gamesys Group and Degree 53.

Bally’s is also one of the two operators that has yet to launch sports betting sites in New York. It received approval in November to be one of nine sportsbooks to receive a sports betting license in the state. Resorts World is the other operator that hasn’t gone live.

Don’t expect to place any Super Bowl wagers on Bally Bet New York. Speaking with CNBC, Kim mentioned BallyBet won’t go live in New York until “sometime in April” and reiterated he was fine with missing the Super Bowl.

“We have a longer-term plan,” Kim told CNBC. “I think part of this is why maybe our plan isn’t fully being grasped by the public markets. Public markets tend to be very short-term oriented.

“We think that actually, the current version of sports betting is not a great business. It’s a fine business, not a great business. We think that there’ll be a wave of consolidation that will rationalize promotions. But more importantly, I think that people will stop competing with just free money, but people will start competing with product.”