By Mark Hansel
NKyTribune managing editor
Belterra Park in Cincinnati and Belterra Casino Resort in Florence, Indiana, are among four properties to be purchased by Las Vegas-based Boyd Gaming Corporation as part of a complex $2.8 billion agreement involving three gaming companies.
Boyd Gaming will pay $575 million cash for the two Belterra properties and the Ameristar St. Charles Ameristar Kansas City casinos in Missouri.
“This transaction is a compelling opportunity to diversify and expand our nationwide portfolio into new markets at an attractive price,” said Keith Smith, President and Chief Executive Officer of Boyd Gaming. “By adding these four high-quality, well-maintained assets to our portfolio, we will gain strong positions in three of the largest metropolitan areas in the Midwest. This transaction will expand our Company’s size and scale, grow our customer base, and further enhance our substantial free cash flow profile.”
Penn National Gaming, Inc. and Pinnacle Entertainment, Inc. have entered into a definitive agreement under which Penn National will acquire Pinnacle in a cash and stock transaction valued at approximately $2.8 billion.
In connection with the transaction, Penn National has entered into a definitive agreement with Boyd Gaming in which Boyd will purchase the four Pinnacle gaming operations. These divestitures are anticipated to occur immediately prior to, and are conditioned upon, the completion of the Pinnacle acquisition.
Timothy J. Wilmott, Chief Executive Officer of Penn National Gaming, said in a statement the agreement combines the highly complementary portfolios and similar operating philosophies of the transaction partners. He added that Pinnacle employees will be welcomed to the Penn National Gaming team.
“We will be able to leverage the strengths of both our companies and create an unparalleled experience for our regional gaming customers, while generating significant value for our shareholders and business partners,” Wilmott said in a statement. “The combined company will benefit from enhanced scale, additional growth opportunities and best-in-class operations, creating a more efficient integrated gaming company. Going forward, we will have the financial and operational flexibility to further execute on our strategic objectives, while maintaining our track record of industry-leading profit margins and generating significant cash flow to reduce leverage over time.”
Under the terms of the agreement, Pinnacle shareholders will receive $20 in cash and 0.42 shares of Penn National common stock for each Pinnacle share, which implies a total purchase price of $32.47 per Pinnacle share based on Penn National’s closing price on December 15. The transaction reflects a 36 percent premium for Pinnacle shareholders based on Pinnacle’s closing price of $21.86 and Penn National’s closing price of $22.91 on October 4. The transaction has been approved by the boards of directors of both companies and is expected to close in the second half of 2018.
In a statement, Anthony Sanfilippo, Chairman and Chief Executive Officer of Pinnacle Entertainment, called Pinnacle a terrific company whose success is due to the efforts of its more than 16,000 team members that provide great service and memorable experiences for its guests.
“Tim and the Penn National team lead a high-quality organization that, like Pinnacle, has a long track record of operational excellence and accretive growth,” Sanfilippo said. “We believe the combination will 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. Pinnacle shareholders will receive immediate value from the cash consideration, as well as participation in the longer-term growth of Penn National that we expect will occur from the integration of these two great companies into a more efficient, larger-scale gaming entertainment platform.”
He added that Pinnacle is also pleased that Boyd Gaming will be acquiring the Ameristar and Belterra properties.
“We look forward to working closely with Penn National and Boyd to seamlessly transition the Pinnacle businesses to their respective new owners,” Sanfilippo said.
Belterra Park is located on Kellogg Avenue, off Interstate 275 in Anderson Township on the property that was formerly home to River Downs race track.
It includes the Belterra Park thoroughbred race course with live racing from April to October and a 48,000 square-foot gaming floor with more than 1,300 video lottery terminals (VLTs) that operate like slot machines.
Belterra Casino Resort is located in Switzerland County, Indiana, near the Markland Dam, about 40 miles southwest of Cincinnati.
The casino floor features 38,000 square feet of casino space, with more than 12,000 slot machines and video poker games, as well as live table games. The resort includes 608 guest rooms and suites, food venues, a full-service spa and salon, and a 1,500-seat entertainment showroom. It is also home to an 18-hole, Tom Fazio-designed golf course and offers more than 50,000 square feet of luxury meeting and conference space.
Headquartered in Las Vegas, Boyd Gaming Corporation is owner and operator of 24 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi.
Boyd Gaming properties include the Orleans Hotel and Casino and the Suncoast Hotel and Casino in Las Vegas and the Blue Chip Casino in Michigan City, Indiana, near Chicago.
Pinnacle owns and operates 16 gaming and entertainment facilities in 11 jurisdictions across the United States. Following the acquisition of Pinnacle and the planned divestiture of four of its properties to Boyd Gaming Corporation, Penn National will have significantly greater operational and geographic diversity and operate a combined 41 properties in 20 jurisdictions throughout North America.
As part of the transaction, Boyd Gaming will enter into a master lease agreement with Gaming and Leisure Properties, Inc., which owns the real estate of Ameristar St. Charles, Ameristar Kansas City and Belterra Casino Resort. GLPI has entered into an agreement to purchase the real estate of Belterra Park from Penn National, and Belterra Park’s real estate will be leased to Boyd Gaming as part of Boyd Gaming’s master lease agreement with GLPI. The terms of Boyd Gaming’s lease agreement will be substantially similar to Pinnacle’s current master lease with GLPI.
Boyd Gaming expects the transaction to close in the second half of 2018, subject to the satisfaction of customary closing conditions and the receipt of all required regulatory approvals.
The Company intends to finance the transaction through cash flow from operations and availability under its existing credit facility.
Contact Mark Hansel at mark.hansel@nkytrib.com
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