NEW YORK (The Deal) -- Scientific Games (SGMS - Get Report) said Friday that it would acquire rival Bally Technologies (BYI) in a $5.07 billion cash and assumed debt deal that would combine two large manufacturers of lottery and gambling equipment.

Terms of the deal call for New York-based Scientific Games to pay $83.30 in cash for Bally, a premium of 38% to the company's Thursday close, for total equity consideration of $3.27 billion. Scientific Games will also assume and refinance about $1.8 billion in existing Bally net debt.

Las Vegas-based Bally is one of the most celebrated names in gambling equipment, a maker of electronic and table games, systems and technologies for casinos and other users. Scientific Games, maker of lottery games, sports betting technology and social gaming products, said the deal would expand its portfolio of products to include a leading casino management systems and table products including automatic shufflers, proprietary games and electronic table systems.

"The acquisition of Bally provides us with a unique opportunity to combine two exceptional companies with long track records of creating leading-edge games and gaming technology products for players and delivering innovative solutions to our customers," Scientific Games CEO Gavin Isaacs said in a statement. "We believe that the combined company will be uniquely positioned as a strategic partner for gaming and lottery operators, offering a highly diversified suite of value-enhancing products and services across multiple worldwide distribution channels and platforms."

Isaacs, who was named CEO of Scientific Games in June, is a one-time Bally executive who last year sold SHFL Entertainment to Bally for $1.31 billion.

The deal is the second among gaming equipment makers in recent weeks, following Gtech's $6.4 billion agreement to buy International Game Technology for $4.7 billion.

The combination of Scientific Games and Bally would generate more than $3 billion in annual sales, with Scientific Games pledging to extract more than $220 million in annual costs and $25 million in capital expenditure savings post-deal. Scientific Games said it anticipates spending about $75 million to achieve the cost savings, and about $40 million in capital costs to complete the integration of the two companies.

Isaacs is expected to run the combination post-deal, with Bally chairman David Robbins and CEO Richard Haddrill joining Scientific Games' board.

Bank of America Merrill Lynch (BAC - Get Report), Deutsche Bank Securities (DB - Get Report) and JPMorgan Chase & Co.  (JPM - Get Report) are financial adviser to Scientific Games and are providing committed debt financing for the transaction.

A Cravath, Swaine & Moore team including partners Robert I. Townsend III, George F. Schoen and Christine A. Varney provided legal counsel. Latham & Watkins served as the legal adviser to Scientific Games on the financing.

Macquarie Capital served as lead financial adviser to Bally, with Groton Partners named as co-financial adviser. Skadden Arps Slate Meagher & Flom partners Howard Ellin, Ann Beth Stebbins, Regina Olshan, Stephanie Teicher, Michael Zeidel, Bruce Goldner, Clifford Aronson, Alec Chang and David Rievman provided legal counsel.