Two months ago, Scientific Games Corp. bought the slot machine manufacturing company Bally Technologies. The buyout was estimated to $5.1 billion.
This is the second buyout of this magnitude that Scientific Games Corp. has done recently, after it bought International Game Technology for $6.4 billion. It is reported that when Bally Technologies gets a new owner, there will be an one-fifth decline in the employees hired positions outside of manufacturing.
The number concerns both companies together. The layoffs will save up to $83 million which is 43% less than the initial estimation for the first year after the acquisition.
The above-mentioned information is part of the official presentation, that representatives from both companies gave to potential lenders who could fund the merger process. The report came together with the Securities and Exchange Commission last month. Scientific Games withheld from commenting on until the ‘quiet period’ set by SET is over.
Bally Technologies is a company situated with headquarters in Las Vegas. Scientific Games paid a total of $3.3 billion, which makes a little over $83 per share. By acquiring Bally, SCT is also taking care of its debt of close to $2 billion.
The Securities and Exchange Commission stated that SCT had managed to gather around $2 billion just from the presentation, which was around 40% of what is needed to finalize the merger process. The company will continue looking for lenders to gather the rest of the required amount.
There are currently three banks which have agreed to lend money for the buyout process – Merril Lynch, J.P. Morgan and the DP Securities. The merger is planned to be completed by the end of 2014.
Scientific Games has been rapidly expanding during the past few years. Last year it doubled its 2,500 employees after acquiring WMS Industries, a company which manufactures slot machines.
Bally Technologies has also been actively acquiring other businesses. It added new departments in order to successfully complete the acquisition of SHFL Entertainment back in 2013. It currently employs around four thousand employees. When Scientific Games acquired Bally, it became the owner of two of the three major slot machine manufacturers.
The planned layoffs of workers will be from the so called “redundant back office functions” which, according to the presenters of Scientific Games, are from the departments of financing, sales, marketing, accounting and other. Employees working in the production facilities will not be affected by the acquisition.
The two companies will now combine any duplicative expenses, and will bring $50 million in savings the first year. Power consumption, public company taxes, consultancy fees and others will be reduced. In the time span of three years, SGT expects to save more than $220 million from a successful corporate integration.
After the merger process is finished, Bally will become a subsidiary company to Scientific Games. There have been a number of acquisitions of slot machine manufacturers, such as International Game Technology, Multimedia Games and Video Gaming Technologies.
