Weeks after securing financing to build its planned Chicago casino, Bally’s has struck a deal to sell the company to its largest shareholder.
New York hedge fund Standard General, which owns about 25% of Bally’s, reached an agreement with the board Thursday to buy out the rest of the stockholders at $18.25 per share, valuing the casino company at $975 million.
The deal to take the Rhode Island-based Bally’s private, which is pending shareholder and regulatory approval, is expected to close during the first half of 2025.
“What it says is that myself and some of the other large inside shareholders believe that the future is bright, and want to put our money where our mouth is,” Soo Kim, chairman of Bally’s and founding partner of Standard General, told the Tribune Thursday.
As part of the deal, Bally’s will be merged with Queen Casino & Entertainment, which is majority owned by Standard General and operates four casinos in three states, including DraftKings at Casino Queen in East St. Louis. The combined company would own 19 casinos in 11 states, including three in Illinois.
In March, Standard General submitted an offer to buy out the rest of the stockholders at $15 per share, valuing the company at about $648 million. The Bally’s board formed a special committee and retained Macquarie Capital as its financial adviser to evaluate the offer and explore strategic alternatives.
The $18.25 per share price represents a 71% premium to the 30-day average before Standard General’s March offer.
“After a detailed consideration by the Special Committee, with the assistance of our outside financial and legal advisors, it was determined that the Cash Consideration from Standard General delivers a meaningful and immediate value to stockholders,” Jaymin Patel, chairman of the special committee, said in a news release Thursday. “We look forward to working with the team at Standard General and QC&E as we move through the process to complete the merger.”
In 2022, the board rejected a $38 per share buyout offer from Standard General, and Bally’s stock has been falling since, exacerbated by funding concerns faced by the debt-laden casino company as it planned to build its proposed $1.7 billion Chicago flagship. With financing now in place, at least one analyst concurs with the Bally’s board that the $18.25 per share should be enough to get the deal done circa 2024.
Lance Vitanza, senior analyst in TD Cowen’s equity research group, said in a note to investors Thursday an affirmative vote by a majority of unaffiliated shareholders is “highly likely.” He also expected state gaming regulators to sign off on the deal, given that Standard General is already an owner in the casino properties.
“We see a high likelihood the deal closes as planned in roughly one year’s time,” Vitanza wrote.
It’s been an eventful month for Bally’s, which took possession of the Freedom Center printing plant and secured the needed financing to supplant it with a $1.7 billion Chicago casino complex on the 30-acre site in River West.
On July 12, Bally’s announced a deal with Gaming and Leisure Properties, a Pennsylvania-based real estate investment trust, to provide $940 million to fund the construction of the permanent casino.
In addition, Bally’s also finalized redesign of its planned 500-room hotel tower, which was shifted from north of the casino to the south to avoid damaging city water pipes along the Chicago River, pending approval from the city’s planning department.
Kim said securing the Chicago financing was not a catalyst for the buyout offer.
“We’re excited to see that project really come to life,” Kim said. “But this is unrelated to that. This is an affirmation in the company as a whole.”
Bally’s expects to raise more than $2 billion through the transactions with Gaming and Leisure Properties, which include sale-leasebacks on several casino properties. As part of the transaction, Gaming and Leisure Properties is also acquiring the Freedom Center site for $250 million before development begins.
Bally’s owns and operates 15 casinos across 10 states. It made its entree into Illinois in June 2021 with the $120 million acquisition of Jumer’s Casino & Hotel in Rock Island, which it renamed Bally’s Quad Cities.
In 2022, Bally’s won a heated competition to build Chicago’s first casino. The proposal includes an exhibition hall, a 500-room hotel, a 3,000-seat theater, 10 restaurants and 4,000 gaming positions overlooking the Chicago River.
Bally’s Chicago launched a temporary facility at Medinah Temple in September, with plans to open the permanent casino by September 2026.
Kim said Thursday Bally’s commitment to build the Chicago casino complex remains unchanged by the buyout.
“Bally’s is still Bally’s,” Kim said. “We’re just owning more of Bally’s.”
The company’s stock closed at $16.91 per share Thursday, gaining 25% on the buyout news.
rchannick@chicagotribune.com