The deal – which both boards said would help the combined business capitalise on the growing US market – would see Bally’s pay £18.50 per Gamesys share, representing a 12.7% premium on Gamesys’ closing share price yesterday (23 March).
Alternatively, its shareholders may exchange their holding for 0.343 newly issued Bally’s shares per Gamesys share. Bally’s shares were trading at $66.34 per share at market close in New York yesterday, meaning 0.343 shares would be worth £16.55 at the day’s exchange rate.
The founders and executives of Gamesys, who represent 30.7% of its shares, have already agreed to support the deal.
The founders and executives of Gamesys have already agreed to choose the share offer if the deal goes through. This means the maximum amount of cash that may be paid in the deal is £1.6bn.
Lee Fenton, currently chief executive of Gamesys, would become chief executive of the combined group, and two further Gamesys directors would join its board.
George Papanier, chief executive of Bally’s, would stay on the board after the merger and move into a new role running Bally’s estate of land-based casinos.
Explaining the rationale for the deal, the boards pointed to the size of the emerging US online market.
“Bally’s and Gamesys believe that having a combination of both proven, developed technology and land-based platforms across key US states, with global brands, existing customer bases and complementary product offerings will be key to taking advantage of these growth opportunities,” the deal announcement noted.
In addition, the board said that Gamesys would benefit from Bally’s land-based presence, while Bally’s would benefit from the Gamesys technology platform.
“We believe that this combination would mark a transformational step in our journey to become a leading integrated, omni-channel gaming company with a B2B2C business,” Bally’s chair Soo Kim explained.
“We think that Gamesys’ proven technology platform alongside its highly respected and experienced management team, combined with the US market access that Bally’s provides, should allow the combined group to capitalise on the significant growth opportunities in the US sports betting and online markets.
“We are truly excited about the opportunities that this combination would offer and the enhanced and comprehensive experience and product offering that it would enable us to offer our customers.”
Fenton said the businesses shared an “entrepreneurial energy” that would create “a uniquely powerful company”.
“Our shared passion and vision to capitalise on technology disruption to better serve our customers, wherever they may be, should make for an exciting journey for our employees, customers and shareholders alike.”
The boards added that the new business may “pursue growth opportunities through reinvestment and strategic M&A.”
Bally’s intends to finance the deal via a bridge facility, which will be partially refinanced with a capital raise.
Bally’s – formerly known as Twin River – has engaged in a spate of M&A in recent months. This included a deal to acquire daily fantasy sports (DFS) operator Monkey Knife Fight, which closed yesterday, and its pending acquisition of sports betting platform supplier Bet.Works.
The Gamesys Group, meanwhile, was formed when JackpotJoy acquired the legacy Gamesys business.