Intralot to take control of Bally’s international assets in €2.7bn deal
Intralot and Bally’s Corporation have struck a major cash and shares deal that will see the Greek lottery and gambling group acquire the US operator’s technology business. Under the terms of the reverse-style merger, Bally’s will also become Intralot’s majority shareholder.
The agreement, announced late on Monday, will involve Intralot acquiring Bally’s International Interactive arm to create a global iGaming and lottery leader with €1.1 billion in revenues. The deal also bolsters Bally’s cash reserves as it seeks to fund its land-based casino developments in the US and Australia.
Following the transaction, which is slated to complete before the end of the year, Bally’s chief executive Robeson Reeves will replace Nikolaos Nikolakopoulos as Intralot CEO. Nikolakopoulos will lead the lottery division, while Intralot chairman Sokratis Kokkalis and Bally’s chairman Soohyung Kim will remain on the board.
Post-transaction, Intralot is expected to be a leading digital gaming operator and technology provider for lottery products with a footprint in some of the most attractive markets in Europe and North America. The businesses said their combined technology capabilities will allow the expanded Intralot to pursue new opportunities in gaming and lottery markets globally.
Meanwhile, Bally’s and its affiliates’ ownership in Intralot has increased from 26.86% to 33.34%. Following this development, a mandatory tender offer obligation for the remaining outstanding shares of Intralot has been triggered.
Reeves said: “This transaction marks a transformative moment for Bally’s as we unite our outstanding gaming and data technology with Intralot’s exceptional expertise in lottery. Together, we are creating a unique proposition that will pave the way for a new era of innovation and growth across the entire gaming spectrum.”
How the deal benefits Intralot and Bally’s
Intralot and Bally’s said the deal creates a global iGaming and Lottery leader with enhanced diversification and scale and a B2B/B2C product offering that is expected to unlock significant cross-selling opportunities. Other highlights include 38% EBITDA margin pre-synergies, as well as platform synergies.
Revenue opportunities include expansion into new B2C markets, envisaged entry into high-potential charity lottery segments in the UK and US, and cross-sell opportunities across the overall B2B and B2C customer base.
Commenting on the deal, Nikolakopoulos said that Intralot is taking “a major step forward in becoming a global technology and services leader in the Lottery and Gaming sectors”.
He added: “Bally’s brings unparalleled digital capabilities, technological and operational, giving us a unique advantage in helping State Lotteries enhance player experiences and maximise returns for good causes.”
The Intralot deal is the latest in what has been a busy period for Bally’s. In February, it completed its $4.6 billion acquisition by Standard General after it was approved by shareholders in July. Under the deal, Bally’s combined with regional casino operator Queen Casino & Entertainment (QC&E), which is majority owned by Standard General. It was this deal that brought together Bally’s and Intralot as QC&E owned 28% of the latter.
In April, Bally’s and billionaire Bruce Mathieson agreed a deal to acquire embattled Australian operator Star Entertainment for $300 million. Last year, Bally’s revealed that it had agreed to sell its Asian interactive business.
In Q1, Bally’s reported cash reserves of $209 million versus total debt of nearly $3.5 billion. The company is heavily leveraged as it builds casino projects in Chicago and Las Vegas and continues to lobby for a New York casino licence at its golf course in the Bronx.
How the acquisition will be funded
The Bally’s-Intralot cash-and-shares transaction will include a combination of €1.53 billion in cash paid by Intralot and €1.136 billion in newly issued shares delivered to Bally’s.
Intralot has obtained commitments for up to €1.6 billion in debt financing and plans a €400 million equity offering. Bally’s expects to repay secured debt with the proceeds.
Meanwhile, Bally’s has secured commitments for a $500 million secured debt facility which, together with the cash proceeds from the transaction, will be used to repay secured debt. In addition, Bally’s has secured commitments for a $100 million delayed draw secured debt facility, which may be used following the consummation of the transaction for general corporate purposes, including the development of Bally’s Chicago.