US gaming suppliers Scientific Games and Bally Technologies have agreed a merger that will see Scientific Games acquire all outstanding Bally stock in a $5.1bn transaction.

The combined company’s portfolio of products will include casino management systems and table products, proprietary table games and electronic table systems, alongside social and real-money iGaming and iLottery products and services.  

Scientific Games said this will position it to better cross-utilize content and technology across the lottery, gaming and interactive sectors to propel future growth.

It noted that combined revenue in the twelve months ended March 2014 amounted to approximately $3.0bn. It expects to achieve cost synergies of $220m and capital expenditure savings of $25.0m, with anticipated associated costs of $115.0m.

"The acquisition of Bally provides us with a unique opportunity to combine two exceptional companies with long track records of creating leading-edge games and gaming technology products for players and delivering innovative solutions to our customers," said Gavin Isaacs, Scientific Games' president and CEO.  

"With leading gaming, lottery, and interactive content, world-class systems capabilities and table game offerings, we believe that the combined company will be uniquely positioned as a strategic partner for gaming and lottery operators, offering a highly diversified suite of value-enhancing products and services across multiple worldwide distribution channels and platforms."

Bally chief executive Richard Haddrill said: "The combination with Scientific Games will benefit our customers and shareholders. Increased scale, geographic diversity and product development capabilities will create a new runway of growth opportunities through new products and a comprehensive portfolio of customer-focused solutions.  This transaction delivers immediate value to our shareholders, and the highest share price in our history. We look forward to working with our new colleagues at Scientific Games to execute a detailed integration plan to realize customer satisfaction and additional value."

Scientific Games intends to acquire all of Bally’s outstanding shares for $83.30 per share in cash, with the total transaction value of approximately $5.1bn including net debt of approximately $1.8bn.

The acquisition will be financed with debt and cash on hand, and Scientific Games confirmed that it has obtained debt financing for the transaction.

Subject to customary approvals and Bally shareholder approval, the transaction is expected to complete in early 2015.

Shares in Scientific Games Corp. (Co. Data) (NASDAQ:SGMS) were trading up 17.68 per cent on the news at $10.05 per share, while Bally Technologies Inc. (Co. Data) (NYSE:BYI) was trading up 30.66 per cent at $78.62 per share.

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