Bally’s Corporation has reached an agreement to purchase Tropicana Las Vegas casino from Gaming and Leisure Properties (GLPI). The omnichannel provider of land-based gaming and interactive entertainment estimates the purchase price to be about $308 million. Bally’s shares fell by as much as 10.7% following the announcement.
Bally’s (BALY) plans to lease the land underlying the casino for 50 years and pay $10.5 million as annual rent. Bally’s CEO and President George Papanier stated, “The Strip is visited by over 40 million players and guests per year, which we believe will significantly enhance Bally’s customer base and player database, as well as unlock marketing opportunities to leverage the iconic Bally’s brand. This expansion will also support the growth and development of our online and interactive business”.
After nearly doubling in value in 2020, Bally’s shares are up 8% year to date. (See Bally’s Corporation stock analysis on TipRanks).
In other news, Bally’s is poised to combine with Gamesys after reaching definitive terms. Bally’s chairman, Soo Kim, commented on the combination, “We believe that this combination will mark a transformational step in our journey to become a leading integrated, omni-channel gaming company with a B2B2C business.
Gamesys’ gaming technology combined with the US market access that Bally’s provides should allow the combined company to pursue emerging opportunities in the US sports betting and online markets.
The proposed deal is expected to not only create value for Bally’s Corp but is also in line with the companies’ growth strategies.
On the same day, coincidentally, Bally’s reported solid preliminary quarterly results for the three months ended March 31, 2021. It expects consolidated revenues to be more than $185 million and adjusted EBITDA more than $50 million.
KeyBanc’s analyst Brett Andress has reiterated an Overweight rating on the stock and raised the price target to $70, from $65, implying 10% upside potential. The analyst is betting on the reopening of Las Vegas to have a positive impact on Bally’s prospects.
Overall, Wall Street rates BALY a Strong Buy based on 5 Buys. The average analyst price target of $77.60 implies 42.91% upside potential to current levels.
Bally’s stock scores a 9 out of 10 on the TipRank’s Smart Score tool, implying that the stock has a strong chance of beating market expectations.
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