Penn National Gaming Acquires Pinnacle Entertainment in $2.8 Billion Deal to Expand Casino Empire

Penn National Gaming, the parent company behind the Hollywood Casino brand, has put the finishing touches on a $2.8 billion acquisition of fellow American casino conglomerate Pinnacle Entertainment.

The terms of the takeover bid were confirmed in a press release dated December 18, with Penn National Gaming absorbing 12 of Pinnacle Entertainment’s 16 casino properties.

Pinnacle Entertainment previously operated several well-known casino brands, including Ameristar, Belterra, and Boomtown. Under the terms of the deal, Penn National Gaming has already agreed to sell four casinos – Ameristar Kansas City (Missouri) Ameristar St. Charles (Missouri); Belterra Casino Resort (Indiana), and Belterra Park (Ohio) – to Boyd Gaming at an approximate cost of $575 million per property.

Shareholders of the former Pinnacle Entertainment are set to receive $20, along with 0.42 shares of Penn National Gaming common stock, per share owned. The implied total purchase price per share of Pinnacle Entertainment stands at $32.47, as based on the closing price of Penn National Gaming stock as of December 15.

As a result of the deal, Penn National Gaming shareholders will hold 78 percent of the new entity’s outstanding shares, while Pinnacle Entertainment shareholders will control the other 22 percent.

Timothy J. Wilmott, who serves as chief executive officer for Penn National Gaming, issued a statement addressing the major merger’s implications:

“By combining our highly complementary portfolios and similar operating philosophies, we will be able to leverage the strengths of both our companies and create an unparalleled experience for our regional gaming customers, while generating significant value for our shareholders and business partners.

“The combined company will benefit from enhanced scale, additional growth opportunities and best-in-class operations, creating a more efficient integrated gaming company.

Going forward, we will have the financial and operational flexibility to further execute on our strategic objectives, while maintaining our track record of industry-leading profit margins and generating significant cash flow to reduce leverage over time.”

Anthony Sanfilippo, his counterpart at Pinnacle Entertainment, praised Wilmott and the Penn National Gaming team as the perfect partners for an acquisition:

“Pinnacle is a terrific company whose success is due to the efforts of our more than 16,000 team members that focus every day on providing great service and memorable experiences for our guests.

Tim and the Penn National team lead a high-quality organization that, like Pinnacle, has a long track record of operational excellence and accretive growth.

We believe the combination will produce an even stronger gaming entertainment platform that builds on the individual accomplishments of both companies and benefits our collective team members, shareholders and guests.”

Per the press release, both companies expect the deal to close in the second half of 2018.

When it does, Penn National Gaming will oversee 41 casino venues covering 20 jurisdictions across North America, with more than 35,000 employees on the payroll.

Along with its Hollywood Casino brand, which includes venues in Mississippi, Ohio, and Missouri, Penn National Gaming has acquired several additional properties in recent years.

In 2010, a $231 million debt transfer acquisition added the M Resort in Las Vegas to the Penn National Gaming portfolio. And in 2015, the company purchased the Tropicana on the Las Vegas Strip for $325 million.

In absorbing most of Pinnacle Entertainment’s properties, Penn National Gaming adds popular regional casinos like Boomtown New Orleans, River City Casino in St. Louis, and Ameristar Casino Resort in Black Hawk, Colorado.