Penn National Completes Pinnacle Deal

With the approval of 14 state regulators and the Federal Trade Commission, Penn National Gaming finalized its $2.8 billion acquisition of 12 Pinnacle Entertainment casinos. Boyd Gaming acquired four Pinnacle casinos to avoid federal trust issues. Penn National now operates 40 casinos and racetracks in 18 states and employs more than 30,000 people. Only Penn’s purchase of Margaritaville (l.) in Bossier City, Louisiana is still outstanding.

Wyomissing, Pennsylvania-based Penn National Gaming has finalized its $2.8 billion purchase of 12 casinos operated by Las Vegas-based Pinnacle Entertainment. Announced late last year, the Penn-Pinnacle deal had to be approved by 14 different state gaming authorities and the Federal Trade Commission. Penn National Chief Executive Officer Tim Wilmott said, “Our acquisition of Pinnacle Entertainment marks a significant milestone in Penn National’s 24-year history of growth as a public company.” He added Penn National will realize about $100 million in cost savings due to the Pinnacle acquisition. In addition, Pinnacle’s corporate headquarters will remain in Las Vegas.

To resolve any potential federal anti-trust issues, Las Vegas-based Boyd Gaming agreed to acquire the operations of four Pinnacle casinos in three states for $575 million. Boyd now operates 29 casino properties in 10 states. Penn and Boyd lease the Pinnacle casino operations from real estate investment trust Gaming and Leisure Properties, which owns the land associated with the resorts.

One still-pending transaction is Penn National’s partnership with real estate investment trust VICI Properties to jointly acquire Margaritaville Resort Casino in Bossier City, Louisiana for $376 million.

As a result of the deal, Penn National now operates a total of 40 casinos and racetracks in 18 states, with more than 49,000 gaming machines, 1,200 table games and nearly 9,000 hotel rooms. The company employs more than 30,000 people. It’s the second-largest gaming company by properties in the U.S. after Caesars Entertainment, which operates nearly 50 U.S. properties.

“Penn National is poised for continued growth with a portfolio of premiere gaming facilities and more than five million active customers in its player rewards database,” Wilmott said in a statement. “With the expected incremental free cash flow to be generated from our expanded base of operations, we believe we are well positioned to reduce leverage, evaluate additional accretive strategic growth investments and opportunistically return capital to shareholders.”

Boyd is buying Pinnacle’s two Ameristar casinos in Missouri and the Belterra gaming brands in Indiana and Ohio. Boyd Chief Executive Officer Keith Smith said the purchase “significantly expanded our portfolio and enhanced our free cash flow profile at a compelling multiple. We have gained a strong presence in three of the Midwest’s largest gaming markets, with access to millions of potential new customers.”

In September, Boyd completed a $280.5 million acquisition of the Valley Forge Casino Resort near Philadelphia.

GLPI Chairman, Chief Executive Officer and President Peter M. Carlino commented, “The successful completion of this transaction demonstrates our ability to create value for our shareholders through complex and unique structures. Additionally, it shows our readiness to partner with our tenants to help them grow and achieve their own strategic goals. Through this transaction, we have added an economic interest in two additional high quality regional gaming facilities, increasing our annual real estate income by $45.3 million. In Boyd, we have added a new tenant that is highly regarded in the gaming space and is an active consolidator of casino assets and operations Further, in announcing our 2019 dividend guidance, we are pleased to demonstrate our commitment to accretive growth and increasing returns to shareholders.”