Casino operator Boyd Gaming has pulled the trigger on its rumored deal to acquire the Las Vegas assets of rival Cannery Casino Resorts.
Last week, rumors circulated that Boyd was close to a deal with Cannery, which operates the Cannery Casino Hotel in North Las Vegas and the Eastside Cannery Casino and Hotel in the Las Vegas Valley.
On Monday, Boyd confirmed that it had entered into a definitive agreement to acquire the two Vegas properties from Cannery for $230m. The acquisition will be funded entirely with cash on hand and Boyd expects the deal will be complete sometime in Q3 2016.
Boyd CEO Keith Smith called the deal “a great tuck-in acquisition that further expands our presence in the Las Vegas market at an attractive price.” The Cannery deal comes just one week after Boyd announced a $380m deal to buy the Aliante Casino in North Las Vegas.
Boyd now boasts 12 properties in southern Nevada, which has been the company’s best performing division in recent years. Smith said the recent acquisitions will “give us a strong foothold in North Las Vegas, one of the fastest-growing areas in the Las Vegas Valley.”
Following some “operating refinements” and expected synergies, Smith said Boyd anticipates that the Cannery properties will be cash flow positive and will generate a combined $32m in earnings in their first year under Boyd’s control.
BOYD Q1 EXTENDS HOT STREAK
Boyd released its Q1 earnings report on Tuesday, which showed the company extending its streak of year-on-year revenue growth to seven quarters, albeit just barely. Total revenue was up less than 1% to $552.4m, adjusted earnings rose 7.5% to $160.4m while net income fell 5% to $33.2m.
The aforementioned Las Vegas Locals market continued to shine, with revenue up 5.4% to $158.4m, the fourth consecutive quarter of year-on-year growth. The Downtown Las Vegas segment improved 3.5% to $58.6m.
The Midwest and South segment saw revenue fall 8.5% to $209.2m, while the Peninsula segment was basically flat at $126.2m.
Atlantic City’s market-leading Borgata property, in which Boyd holds a 50% share, reported revenue up 4.2% to $190.3m, thanks to “significant” growth in slots volume. The Borgata’s adjusted earnings rose 20% to $45.3m, the property’s strongest earnings growth since 2009.