Scientific Games/Bally Merger Could Cut Jobs

Officials of Scientific Games and Bally Technologies told lenders that the merger of the two companies could lead in a 21 percent reduction in the combined workforce.

The pending acquisition of diversified gaming supplier Bally Technologies by lottery giant Scientific Games could result in a 21 percent reduction in the combined companies’ non-manufacturing workforce.

Scientific Games employs just under 5,000; Bally employs nearly 4,000. Those numbers reflect recent acquisitions by the two companies, with Scientific Games’ purchase of WMS Industries and Bally’s buyout of SHFL entertainment.

The information included in a presentation officials of the two companies made to prospective lenders who would finance the transaction, obtained and released last week by the Las Vegas Review-Journal, shows the jobs eliminated would provide a cost savings of $83 million, which is 57 percent of the $144 million in synergies estimated for the first year of combined operations.

Scientific Games is paying $5.1 billion, or $83.30 per share, for Bally, and will assume $1.8 billion in debt after the deal closes. The presentation to lenders was made in September, after which Scientific Games reported raising $2 billion based on the report.

The report says job cuts will eliminate “redundant back-office functions,” including accounting, finance, marketing, executive layers, investor relations and sales.

The lenders include Bank of America-Merrill Lynch, Deutsche Bank Securities and J.P. Morgan. The companies hope to close the merger by the end of 2014, after which Bally will operate as a subsidiary of Scientific Games.

The deal is one of a spate of consolidation moves in the supply sector over the past year, including GTECH’s pending buyout of leading slot manufacturer IGT, Global Cash Access’ purchase of slot manufacturer Multimedia Games, and Aristocrat’s acquisition of Video Gaming Technologies, in addition to the acquisitions made by Scientific Games and Bally.