Scientific Games and Bally Complete Merger

After shareholder approval and completion of regulatory and financing requirements, Scientific Games completed the acquisition of Bally Technologies. CEO President and CEO Gavin Isaacs (l.) announced the execs slated to lead the various divisions.

Lottery and gaming giant Scientific Games Corporation announced that it has completed its merger with diversified slot, table and system supplier Bally Technologies, Inc., under an agreement that will make Bally a wholly owned subsidiary of Scientific Games.

The aggregate transaction value was approximately $5.1 billion, including the refinancing of approximately $1.8 billion of existing Bally net debt.

“Completing the Bally transaction brings together two exceptional organizations with a common culture of innovation and customer focus,” said Gavin Isaacs, president and chief executive officer of Scientific Games. “We are excited by the opportunities that will be created by combining each organization’s core strengths in developing engaging gaming entertainment products, advanced technologies and systems, and providing value-added services to help our customers grow their revenues.

“Our mission is to become the premier gaming and lottery entertainment and technology company in the world by offering gaming and lottery operators a comprehensive and differentiated portfolio of high earning, player-appealing games and technology solutions. By leveraging our excellence in the development of imaginative gaming entertainment with value-added services, we seek to become the partner of choice for our gaming and lottery customers. Further, by pursuing continuous improvement in our business processes, we expect to enhance our margins, grow free cash flow to reduce our debt, and build long-term value for our stockholders.”

The final hurdles were crossed earlier in the week when Nevada regulators gave their blessing to the merger. Chairman Ronald Perelman, a New York financier who owns 30 percent of the company, was asked why this deal came about.

“I think the answer is one word. Content,” Perelman said. “These two companies provide a great base to distribute content across a greater platform. That’s what our customers want to see.”

Just after the merger announcement, Scientific Games announced its new executive leadership team, which will oversee an organization comprised of three operating units: Gaming, Lottery and Interactive. Former Bally CEO Richard Haddrill will become vice chairman.

In addition to Isaacs and Executive Vice President and Chief Financial Officer Scott Schweinfurth, the executive leadership team of Scientific Games will include:

• Derik Mooberry, group chief executive, gaming. Mooberry, with more than 20 years of gaming industry experience, was most recently senior vice president of games, table game products and interactive research and development for Bally. He also oversaw Bally’s business in Mexico and South America.

• James Kennedy, group chief executive, lottery. Kennedy, with nearly 30 years of lottery industry experience, will continue to head the lottery division. He previously served as president, printed products, and chief marketing officer for Scientific Games.

• Jordan Levin, president, interactive. Levin has served as managing director of Williams Interactive at Scientific Games since January 2014, having previously been chief operating officer of Williams Interactive, a subsidiary of WMS Industries Inc. Prior to that, he was WMS’ vice president of business development.

“Our new senior management team comprises some of the most accomplished executives in the gaming, lottery and interactive industries,” said Isaacs. “I am very excited to have this team of great leaders from Scientific Games, WMS, Bally and SHFL entertainment, Inc. helping to lead the company forward. Our new organizational structure will focus on driving consistent and measurable progress on our goals of increasing profitable global growth and increasing free cash flow to pay down debt.

“The experience, leadership skill and commitment that each of our senior leaders brings to the company will be a significant influence in our integration efforts and development of solutions to bring value to our customers and shareholders.”

Under Mooberry’s leadership, the company’s Gaming Group will comprise the WMS, Bally, SHFL and Scientific Games gaming businesses that serve casino and other gaming operators worldwide.

Under Kennedy’s leadership, the Lottery Group will comprise the existing Scientific Games lottery operations, including its Instant Products, Lottery Systems, Interactive Lottery and MDI businesses that serve lottery operators worldwide.

Under Levin’s leadership, the Interactive Group will comprise the Scientific Games and Bally interactive social gaming operations, including Jackpot Party Social Casino, Gold Fish Social Slots, Dragonplay Slots, Dragonplay Live Hold ‘Em Poker, and the Williams Interactive, Bally and SHFL real-money online gaming businesses. Mooberry, Kennedy and Levin will each report directly to Isaacs.

The finalization of the merger came after Bally stockholders, at a special meeting last week, overwhelmingly approved the previously merger plan. More than 99.61 percent of the votes represented and cast at the meeting, or approximately 76.97 percent of the total outstanding common stock eligible to vote as of the October 20, 2014 record date, were voted in favor of the approval of the merger agreement. Stockholders also approved the non-binding advisory proposal regarding merger-related compensation with a vote of more than 65.83 percent of the votes represented and cast at the meeting.

New York-based Scientific Games is paying $83.30 per share to acquire all outstanding shares of Las Vegas-based Bally, valued at $3.3 billion. The lottery company is also assuming $1.8 billion in debt. The merger agreement is expected to close by the end of the year.