On Thursday, Boyd announced that it had reached a deal with Valley Forge Convention Center Partners L.P. to acquire the casino in King of Prussia, Pennsylvania for $280.5m in cash.
The purchase price represents an implied multiple of 7x EBITDA, and Boyd expects the deal to be immediately accretive to its earnings. Boyd will use incremental debt financing to fund the deal, which the company expects will close in Q3 2018.
Valley Forge currently offers 600 slot machines, 50 table games and nearly 500 hotel rooms, but the property plans to add around 250 more slots early in the new year, thanks to the new wiggle room afforded Category 3 license holders like Valley Forge in the wide-ranging gambling expansion bill the state approved last month.
That legislation also allowed Category 3 ‘resort’ casinos to drop their much-loathed customer admission fees, which Boyd expects, along with the added slots, will help drive increased customer traffic to the property.
Valley Forge earned slots revenue of $80.2m in the state’s most recent fiscal year, next to last of the state’s 12 casino operators. Valley Forge fared better on the table games chart, ranking ninth with $34.3m, although this was down 7% from the previous fiscal year. November 2017’s table chart put Valley Forge in eighth spot thanks to revenue spiking by nearly one-third.
Boyd CEO Keith Smith celebrated his company planting its flag in the country’s second-largest commercial gaming state as “another excellent opportunity to further grow and diversify our nationwide portfolio.”
Smith also hinted that Boyd was interested in participating in Pennsylvania’s upcoming launch of online gambling operations, noting that the gaming legislation allowed for “the introduction of new forms of gaming.” There’s also the potential to launch sports betting operations, pending next year’s Supreme Court decision on New Jersey’s bid to overturn the federal betting ban.
Thursday’s announcement follows just days after Boyd agreed to buy four Pinnacle Entertainment casinos, as part of that company’s absorption by rival Penn National Gaming. Boyd now operates 29 properties across 10 states.