American casino operator Pinnacle Entertainment has announced that it had reached a tentative agreement with the Federal Trade Commission regarding the former’s planned $2.8 billion acquisition of regional gaming rival Ameristar Casinos Inc. This development comes weeks after the FTC blocked Pinnacle’s acquisition of Ameristars Casinos largely because of anti-trust concerns.
The FTC’s decision to put the clamps on the buyout stemmed from its concern that such a merger between the two Las Vegas-based companies would hurt competition and subject some of its casinos to reduced payouts, particularly in St. Louis, Missouri and Lake Charles, Louisiana.
As it stands now before the agreement is sealed, Pinnacle and Ameristar each have casino properties in Missouri and should the acquisition go through, the former would have a 58.4 percent control of the market, one that includes a pair of casinos on the Illinois side of the Mississippi.
But after weeks of discussions and constant back-and-forth, the days of explaining its Ameristar acquisition appears to have come and gone and replaced by renewed optimism that a deal could be struck before the end of the year. In a statement, Anthony Sanfilippo, chief executive officer of Pinnacle Entertainment, said: “We are pleased with the progress we have made in addressing the Federal Trade Commission’s administrative complaint and look forward to completing our proposed acquisition of Ameristar as soon as possible in the third quarter”.
As part of the agreement, Pinnacle disclosed to the FTC its plans to sell the two Ameristar casino projects in the aforementioned locations of Lake Charles, Louisiana and St. Louis, Missouri. It was a move our own Vince Martin pointed out a few days ago, one that Pinnacle was seemingly compelled to do in order to get the nod from the Federal Trade Commission. Granted, the discussions took faster than expected, especially in light of concerns that the effect of the FTC blocking the acquisition had on share prices of both Pinnacle and Ameristar.
But after hearing of the FTC’s concerns regarding the acquisition and the competitive imbalance it poised to bring to the casinos in Missouri and Louisiana, it certainly looks like Pinnacle acted fast to convince the the commission that it was going to sell the two casinos, thus cutting the legs of the FTC’s concerns over the acquisition.
Analysts initially pegged the issue to drag on throughout the year, possibly even spilling over into the next, but now that it appears that Pinnacle is acquiescing to the FTC’s worries, a deal is now likely to happen sooner than expected.