Real estate investment trust Gaming & Leisure Properties Inc. (GLPI) announced on Monday that it had offered $4.1 billion to buy Pinnacle Entertainment‘s real estate assets.
News of the offer by GLPI, which was spun off from casino operator Penn National Gaming in 2013, was made public after Pinnacle reportedly refused to discuss GLPI’s initial offer in January.
“Notwithstanding the attractiveness of this offer, Pinnacle has again refused to engage, which is why we are bringing our value-enhancing proposal directly to their shareholders,” GLPI CEO Peter Carlino said, as quoted by Reuters.
Under the proposed deal, Pinnacle shareholders would receive one share of Pinnacle’s casino operations and 0.5517 shares of GLPI for each share in Pinnacle that they own. That would amount to $36 in assets for every share Pinnacle shareholders currently own, a total value of $2.17 billion. GLPI also said that with the inclusion of debt, the transaction would be worth close to $4.1 billion.
While some have deemed GLPI’s offer “hostile,” the news was well-received on Wall Street, where shares of GLPI rose 12.5% to $36.43, the biggest one-day gain since the 2013 spinoff. Shares in Pinnacle, which owns 15 casinos including the Ameristar chain, rose 15.3% before closing at $31.61.
Pinnacle had previously announced its own plan to split up its real estate and operating assets into two companies by 2016. GLPI says its offer would speed up the process and reduce risk.
Late Monday, Pinnacle disputed GLPI’s claims of non-engagement, saying it had concluded that the January proposal offered no premium on its own REIT plans. Pinnacle said it had received GLPI’s modified proposal on Friday and would respond promptly.
