The Avanti Group the equities research house based in Tokyo, providing professional trading and investment research solutions to institutional and private investors across the globe have recently drawn their investor’s attention to Scientific Games, controlled by the billionaire Ronald Perelman is to pay $83.30 in cash for each of Bally’s common shares a premium of some 38% over the closing price. For Scientific Games it is their second acquisition worth in excess of $1 billion in less than twelve months, in a period that sees the gambling-equipment sector having to deal with weaker consumer spending, casino gluts and internet based competition.

The buyout may well be a case of Déjà vu for Gavin Isaacs, who took up his post at Scientific Games in June, having been the former CEO of SHFL Entertainment Inc, which Bally bought for $1.3 billion in 2013, and prior to that serving as COO at Bally. Between them, both companies expect to realize $220 million in cost savings per annum in addition to some $25 million in capital expenditure savings per year through consolidation of their operations and increased efficiency in engineering, manufacturing and customer service areas as well as administrative operations.

“The trend among gaming industry machinery suppliers has been one of consolidation for the last two years or so and Scientific Games has been perhaps at the forefront of this trend conducting two very large scale acquisitions back to back within a period of less than twelve months. The industry is becoming a very close one as company heads and executives are pretty much known to each other as former colleagues, making this an easy industry to scale down and combine,” said Martin Blanke Equity Research Specialist at The Avanti Group.

The $3.3 billion buyout is inclusive of a net debt of some $1.8 billion, which adds immediately to the earnings per share for Scientific Games, according to the statement released concerning the purchase. When judged by annual revenue, Scientific Games and Bally are similar in size to one another, with the two companies generating combined sales of around $3 billion for the year ended March 31.

“The gaming industry may well be facing what can be described as tough times in the U.S, by their standards anyway and this has seen a response from manufacturers and suppliers whose take on the matter is to consolidate operations thereby increasing market share at a stroke while enjoying reduced operating expenses and reducing the problem of competition,” concluded Martin Blanke Equity Research Specialist at The Avanti Group.

The Avanti Group is an equity research house providing research and analysis outsourcing solutions for institutional financial traders worldwide, founded in early 2003.