SAN DIEGO and LAS VEGAS, Aug. 1, 2014 /PRNewswire/ -- Shareholder rights attorneys at Robbins Arroyo LLP are investigating the proposed acquisition of Bally Technologies, Inc. (NYSE: BYI) by Scientific Games Corporation (NASDAQ: SGMS). On August 1, 2014, the two companies announced the signing of a definitive agreement pursuant to which Scientific Games will acquire all outstanding shares of Bally common stock. Under the terms of the agreement, Bally shareholders will receive for $83.30 per share in cash.
Is the Proposed Acquisition Best for Bally and Its Shareholders?
Robbins Arroyo LLP's investigation focuses on whether the board of directors at Bally is undertaking a fair process to obtain maximum value and adequately compensate Bally shareholders.
As an initial matter, the $83.30 merger consideration is substantially below the target price set by at least six analysts, including a price of $88.00 set by an analyst at Macquarie on January 2, 2014 and a price of $87.00 set by analysts at Stifel and Brean Capital LLC on May 1, 2014 and October 31, 2013, respectively. In addition, on May 1, 2014, Bally released its financial results for the company's third quarter of fiscal 2014, reporting record quarterly revenue and Adjusted EPS. Specifically, Bally reported quarterly revenue of $338.4 million, an increase of 30.6% over the same period in 2013. Further, the company's Adjusted EPS increased 18% compared to the same quarter the prior year to a record $1.10 per share. Bally's also reported record systems revenue for the sixth consecutive quarter.In announcing these results, Ramesh Srinivasan, Bally's President and CEO, stated, "We achieved outstanding financial and operational results in the quarter which helped drive a record 26 percent adjusted operating margin for the first nine months of fiscal 2014 versus 23 percent in the prior year.… We remain confident that our industry-leading innovation as evidenced by the Pro Wave platform and strength across a broad portfolio of products will help us grow our business into fiscal 2015 and beyond." In light of these facts, Robbins Arroyo LLP is examining Bally's board of directors' decision to merge the company now rather than allow shareholders to continue to participate in the company's continued success and future growth prospects.