Monday was a big day in the US regional casino sector, with three-way deal-making involving Penn National Gaming (PNG), Pinnacle Entertainment and Boyd Gaming.
The day’s major announcement came as PNG confirmed it had reached a $2.8b cash-and-shares deal to acquire Pinnacle, cementing PNG’s status as the nation’s biggest regional gaming operator. Rumors of such a deal had been circulating since October.
Pinnacle owns and operates 16 gaming venues, but PNG will only be absorbing 12 of these properties. PNG reached a separate all-cash $575m deal that will see Boyd Gaming assume control over four Pinnacle venues: Ameristar St. Charles (Missouri); Ameristar Kansas City (Missouri); Belterra Casino Resort in Florence, Indiana; and Belterra Park in Cincinnati, Ohio.
The enlarged PNG will operate a total of 41 gaming venues in North America, which offer a combined 53k slot machines, 1,300 gaming tables, 8,300 hotel rooms and roughly 35k employees. The deal is expected to be complete sometime in H2 2018, subject to approval by regulators in the states in which the companies operate.
PNG CEO Timothy J. Wilmott said PNG and Pinnacle had “highly complementary portfolios and similar operating philosophies” and the enlarged PNG would benefit from “additional growth opportunities, including both real-money and free-play online gaming.
Pinnacle CEO Anthony Sanfilippo said he was looking forward to working with both PNG and Boyd to ensure a seamless ownership transition. Sanfilippo said the Pinnacle deal would “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.”
Boyd CEO Keith Smith was equally bullish on the deal’s potential, saying his company had gained “strong positions in three of the largest metropolitan areas in the Midwest” that would help “expand our company’s size and scale, grow our customer base, and further enhance our substantial free cash flow profile.”
Both PNG and Pinnacle share a landlord in real estate investment trust Gaming and Leisure Properties Inc (GLPI). Boyd has entered into a master lease agreement with GLPI for the four Pinnacle properties Boyd is acquiring under terms that Boyd says “will be substantially similar” to Pinnacle’s existing master lease.
