Slot machine manufacturer Bally Technologies told investors on Wednesday its expects to close its $1.3 billion acquisition of gaming equipment rival SHFL entertainment by the end of the year.
The company, which said its profits grew 6 percent in the company’s first quarter, will fund the transaction through a proceeds from a new $1.1 billion terms loan created in August.
“We continue to focus on and execute very well on all aspects of our core business, while undertaking significant and successful integration planning efforts in preparation for the planned acquisition of SHFL entertainment,” said Bally CEO Ramesh Srinivasan.
The Las Vegas-based company said its operating income for the quarter than ended Sept. 30 was $57 million, or 97 cents per share. In the same quarter a year ago, Bally Technologies reported profits of $53.6 million and earnings per share of 77 cents.
Bally said its total revenues grew 6 percent to $249.3 million in the quarter.
The transaction to acquire SHFL for $23.25 per share still requires approval from SHFL’s stockholders. Also state gaming regulatory agencies, including the Nevada Gaming Commission, need to sign off on the deal. Bally said one of the company’s board members, Kevin Verner, resigned from his position to serve as a consultant and oversee the planning and post-integration efforts for the acquisition.
Bally spent approximately $5.2 million during the quarter on the transaction and expect to incur other costs and expenses on the deal during the fiscal year.
As for operations, Bally said revenues from its systems division grew 48 percent to $76 million while gaming operations saw first quarter revenues hit $102 million, due primarily to a 12 percent increase in the installed base of the company’s wide-area progressive games network.
“We showcased seven new wide-area progressive titles at last month’s Global Gaming Expo, up from three new titles shown last year, reflecting our escalating (research & development) commitment to our gaming operations footprint,” Srinivasan said. “Customer response … was very encouraging.”
In a report to investors before Bally announced first quarter results, Eilers Research principal Todd Eilers said he expected the company to have a healthy first quarter.
“Overall, we continue to like Bally shares with strong momentum in all three business segments and we like the combination of SHFL entertainment as it provides both cost and revenue synergies and establishes a much improved interactive offering,” Eilers said.
(c) 2013, Stephens Media LLC