Great expectations for Scientific Games – Bally Tech merger

News on 4 Sep 2014

The forthcoming merger of Scientific Games Corporation with Bally Technologies will deliver more revenue and profits, much of it through early and easily achieved synergy gains, Scientific Games has asserted in a filing with the U.S. Securities and Exchange Commission this week.

The two companies are among the gaming and lottery industry leaders, and the merge will deliver a company second only to the merged GTech and IGT corporates, offering a wide range of products across land and online channels and technologies.

The filing on September 3 posits synergy savings alone of $220 million – 11 percent of total costs in the 2 companies – most of that being quickly and simply accrued within the first year of combined operations.

Unfortunately, that will entail staff cuts of up to 21 percent, whilst savings through synergy in research and development are also envisaged

The filing also details one-off merger costs of $76 million for synergies and $40 million for capex.

Revenue and gross margins are expected to grow in FY14 for table products, interactive games, instant products, but to decline in systems, and lottery systems, the SEC presentation suggests.

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