A year ago, New York financier Ronald Perelman was adding a slot machine division to his Scientific Games Corp., one the top lottery providers in the U.S.
As early as Friday, Scientific Games will become the gaming industry’s most diversified global business with 10 different components that touch all aspects of legalized gambling — lotteries, slot machines, table games, casino and lottery management systems, and interactive gaming.
Nevada gaming regulators signed off on Scientific Games’ $5.1 billion purchase of slot machine giant Bally Technologies on Thursday, paving the path for the transaction, first announced July 31, to close, possibly by Friday.
Nevada regulatory approval was the last piece of the puzzle needed for the deal to be finalized. Bally shareholders overwhelmingly approved the transaction on Tuesday while federal anti-trust approval and the sign-offs by other regulatory bodies came during the summer and fall.
It took the Gaming Control Board less that 45 minutes to unanimously recommended approval. The Nevada Gaming Commission unanimously supported the recommendation after spending roughly 30 minutes discussing the transaction.
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.
“This is a straight-forward transaction,” said Control Board member Shawn Reid.
State gaming agents investigated both companies extensively in the past 18 months. Last year, Scientific Games bought slot machine maker WMS Industries for $1.5 billion. Bally purchased table gaming provider SHFL entertainment for $1.3 billion.
Now, all four companies are under the auspices of Scientific Games.
Perelman, 71, who owns more than 30 percent of Scientific Games, closed the WMS purchase in October 2013. He said Thursday he never imagined being back in front of state gaming regulators a year later.
“I think the answer is one word. Content,” Perelman told the gaming commission. “These two companies provide a great base to distribute content across a greater platform. That’s what our customers want to see.”
Perelman, who is ranked 32nd on the Forbes 400 List of Billionaire with a net worth of $14.5 billion, said in a brief interview between the board and commission meetings that he enjoys being part of the gaming industry.
“We’ve been very fortunate as a company,” Perelman said.
Scientific Games CEO Gavin Isaacs outlined the new corporate structure for gaming regulators, saying that Bally would become a wholly owned subsidiary of Scientific Games. Scientific Games CFO Scott Schweinfurth will become president of Bally. Current Bally CEO Richard Haddrill will become vice chairman of Scientific Games.
Isaacs was chief operating officer of Bally before being named CEO of SHFL three years ago.
Isaacs said the transaction would create $235 million in cost savings. He hopes those savings will be achieved in the first year of the deal.
He said the company will have 8,300 global employees and hinted the company’s corporate headquarters will be located in Nevada. Scientific Games currently employs 140 workers in Nevada. Bally has 1,200 workers in the state.
“Is this a good deal for Nevada? I think it will be,” Gaming Commission Chairman Tony Alamo Jr. asked and answered during the hearing.
Isaacs said the buyout would result in a roughly 10 percent job reduction, not the 21 percent reduction Scientific Games reported in a Securities and Exchange Commission filing in September.
Scientific Games announced this week it completed the financing for the buyout. The company said it priced out $3.15 billion of debt to be used in the transaction. In October, the company said it raised $2 billion for the merger.
Schweinfurth said the combined company will have $3 billion in annual revenue.
The deal is one of two high-profile gaming industry mergers taking place in the manufacturing sector. Also in July, Italian lottery company GTECH Holdings agreed to buy slot machine maker International Game Technology for $6.4 billion. The transaction is still pending and is expected to close early next year.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871. Find him on Twitter: @howardstutz