Bally’s Corporation, the operator of the famous Tropicana in Las Vegas, is currently embroiled in an ownership dispute that could have far-reaching implications for the company. Chairman Soo Kim and his private equity fund, Standard General, have made a bid to take the company private at $15 per share, which is higher than the current trading price of around $10 per share. However, some high-profile investors believe that Kim is undervaluing the company and that the market has lost confidence in its strategy and financial stability.
In a letter to the special committee formed to review Kim’s proposal, Dan Fetters and Edward King of asset management fund K&F Growth Capital argue against accepting the offer. They believe that Bally’s should focus on its core business of operating casinos and quit wasting money on projects that are not central to its operations. Fetters and King criticize the company’s spending on high-end casinos, online sports betting, and internet gaming businesses, stating that these initiatives have driven down the share price and market cap.
Bally’s currently owns 16 casinos in 10 states and has plans to build Chicago’s first casino, a resort to replace the historic Tropicana on the Las Vegas Strip, and a gambling license for a former Trump golf course in New York City. Fetters and King propose bringing on a better-equipped partner for the Chicago casino project and suggest divesting the Tropicana operations on the strip. They also recommend that Bally’s focus solely on digital casinos and divest its New York City golf course and various tech businesses acquired for sports betting.
Despite its legacy brand power, Bally’s has struggled to compete in any space other than regional casinos, leading to a decline in its market cap. The company’s stock is down almost 30% in the past year, further fueling concerns about its future prospects.
This is not the first time that Soo Kim has attempted to take Bally’s private. In January 2022, he offered $38 per share when the stock was trading at $26. While Kim remains optimistic about the company’s potential, other shareholders and investors are skeptical.
The outcome of this ownership dispute will have significant implications for Bally’s Corporation. If Kim’s bid to take the company private is successful, it could lead to a major restructuring and potentially a change in strategy. On the other hand, if the dissenting shareholders are able to sway the special committee and reject the offer, it could force Bally’s to reevaluate its current projects and focus on its core casino business.
As the battle for ownership continues, it remains to be seen how Bally’s will navigate these challenges and whether it will be able to regain the confidence of investors and the market.
