Penn National to Acquire Pinnacle Entertainment in $2.8 Billion Deal

by Camren Skelton

Las Vegas — Penn National Gaming Inc. (NASDAQ: PENN) has agreed to purchase fellow gaming property owner Pinnacle Entertainment Inc. (NASDAQ: PNK) in a cash and stock transaction valued at $2.8 billion.

The deal has been approved by the boards of directors of both companies and is expected to close in the second half of 2018 following an approvals process involving the two companies’ shareholders and applicable gaming authorities.

Pinnacle employs roughly 16,000 team members and owns and operates 16 gaming and entertainment facilities located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio and Pennsylvania. The Las Vegas-based company is also a manager and majority owner of Retama Park Racetrack near San Antonio.

As part of the transaction, Penn National will sell four of the newly acquired assets to Las Vegas-based Boyd Gaming Corp. (NYSE: BYD) for $575 million. The properties include Ameristar St. Charles and Ameristar Kansas City in Missouri; Belterra Casino Resort in Florence, Ind.; and Belterra Park in Cincinnati.

Penn National has also negotiated with Gaming and Leisure Properties (NASDAQ: GLPI), the landlord for Penn National and Pinnacle’s master lease agreements, to sell and lease back the real estate associated with Belterra Park and Plainridge Park Casino in Massachusetts for approximately $315 million.

Penn National is funding the Pinnacle acquisition using proceeds from the GLPI and Boyd transactions, as well as debt financing from BofA Merrill Lynch and Goldman Sachs Bank USA. Penn National’s consultants include financial advisors Goldman, Sachs & Co. LLC and BofA Merrill Lynch, as well as legal advisor Wachtell, Lipton, Rosen & Katz.

For Pinnacle, J.P. Morgan is acting as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor.

Once closed, Penn National will operate 41 properties in 20 jurisdictions across North America with approximately 53,500 slot machines, 1,300 gaming tables and 8,300 hotel rooms. It will employ more than 35,000 people.

Penn National and Pinnacle shareholders will hold 78 percent and 22 percent of the combined company’s outstanding shares, respectively.

Penn National’s stock price closed on Monday, Dec. 18 at $29.13 per share, more than double its closing price this time last year of $14.52 per share.

Pinnacle Entertainment’s stock price closed on Monday at $31.02 per share, also more than double its stock price at this time last year at $14.50 per share.

— John Nelson

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