Bally acquires SHFL to create leading end-to-end gaming supplier

US gaming supplier Bally Technologies has entered into a definitive agreement to acquire SHFL entertainment for a total consideration of approximately $1.3bn.

The transaction has been unanimously approved by the board of directors of both the Bally and SHFL, with Bally agreeing to pay $23.25 per share to acquire SHFL, representing a premium of 24 per cent on the company’s closing share price yesterday of $18.70.

Bally said the acquisition will complement its existing product portfolio while providing new access to the global land-based and online table games market, as well as the growing e-Tables market.

Bally’s president and CEO Ramesh Srinivasan said: “Both Bally and SHFL have long histories of proven innovation, excellent customer service and successfully anticipating and adapting to changes within our industry, which makes bringing our two companies together a great strategic fit.

“The transformational acquisition of SHFL – which joins two high-caliber, talented and creative teams – will further enhance our ability to deliver future growth and serve our customers. SHFL’s intellectual property, renowned brands and industry-leading suite of diverse, high-performance products will enable us to offer an unparalleled offering of gaming products and services, which – when combined with our content, technology, operational capabilities and respective geographic footprints – will provide the most comprehensive product portfolio offered around the world.”

The deal will broaden Bally’s product and service offerings and provide the company with enhanced access to key strategic markets, particularly in Australia and Asia.

SHFL provides products in five distinct categories: Utility products (automatic card shufflers and roulette chip sorters); Proprietary Table Games (live games, side bets and progressives); Electronic Table Systems (various e-Table game platforms); Electronic Gaming Machines (video slot machines); and the newly introduced Shuffle Interactive (online versions of SHFL's table games, social gaming, and mobile applications).

SHFL will strengthen Bally's development infrastructure for land-based, online and mobile distribution channels, as well as significantly enhancing the company’s intellectual property and content portfolios.

SHFL CEO Gavin Isaacs said the company believed that now was the “right time” to join forces with Bally as there was a unique opportunity to combine strengths, particularly their talented teams who have been the key drivers of success for each organization.

“It also represents an opportunity for our shareholders to receive a significant premium for their shares,” said Isaacs. “Like SHFL, Bally focuses on creating both entertaining player experiences through high-performing content and state-of-the-art technological solutions to increase productivity on the casino floor.

“United, we become a larger, stronger organization that we believe will best position the company for future growth. Equally important, we share a common vision to build the industry’s leading supplier based on delivering superior products, solutions and services to customers around the world.”

Bally will acquire all of the outstanding shares of SHFL for $23.25 per share, representing a total enterprise value of approximately $1.3bn, including debt of $8m and cash of $41m as of April 30th. Bally has obtained committed financing to complete the acquisition and confirmed that the transaction is not subject to a financing contingency.

Based on the respective trailing 12-month periods ended March 31st 2013 for Bally and April 30th 2013 for SHFL, the combined company generated approximately $1.3bn in revenues last year, $644m of which were recurring in nature, and adjusted EBITDA of $415m.

Bally added that it expects to achieve synergies of at least $30m following the acquisition.

The deal is subject to approval by SHFL’s shareholders, required regulatory and other approvals and customary closing conditions, and is expected to close by the second quarter of 2014.

Shares in Bally Technologies Inc (Co. Data) (NYSE:BYI) will commence trading at $60.91 per share in New York later today, while shares in SHFL entertainment Inc (Co. Data) (NASDAQ:SHFL) will commence trading at $18.70 per share.