Cash-and-Stock Offer Positions Penn National as Largest US Video Gaming Operator by Residences
Penn National Video Gaming, Inc. (Nasdaq: PENN)has consented to purchase smaller competitor Pinnacle Home entertainment, Inc. (Nasdaq: PNK) in a cash-and-stock transaction valued at $2.8 billion, in the largest U.S. gaming merger given that 2013.
Las Vegas-based Peak owns 16 casinos, mainly in the Midwest and South, including properties that entered into its portfolio after a 2013 offer to get Ameristar Gambling establishments for almost $3 billion. Penn National has 29 properties in states such as California, Ohio, Massachusetts, New Jersey and Nevada.
Penn National will enable Boyd Video gaming Corp. to buy four Pinnacle residential or commercial properties, including Belterra Gambling establishment Resort in Indiana; Belterra Park Gaming and Horse Racing in Cincinnati, OH; and residential or commercial properties in St. Charles and Kansas City, MO; for $575 million.
The transaction, subject to approval of the investors of both business and appropriate video gaming authorities and other regulative and traditional closing conditions, is anticipated to close in the 2nd half of 2018.
After the deal closes, Penn National will be the biggest U.S. gaming business based on homes, running 41 hotel and casino properties in 20 markets throughout The United States and Canada with roughly 53,500 slots, 1,300 tables, 8,300 hotel rooms and more than 35,000 employees.
Peak investors will receive $20 in cash and 0.42 shares of Penn National typical stock for each Pinnacle share, which suggests a total purchase cost of $32.47 per Peak share based on Penn National’s Dec. 15 closing price.
“The combined company will gain from enhanced scale, extra development chances and best-in-class operations, producing a more effective incorporated gaming business,” stated Timothy J. Wilmott, CEO of Penn National Gaming, in a declaration. “We will have the monetary and functional flexibility to further carry out on our strategic objectives, while maintaining our performance history of industry-leading earnings margins and generating significant cash flow to minimize leverage over time.”
Regardless of the fundamental advantages, however, Moody’s Investors Service on Tuesday put the scores of both business on review for downgrade following the announced acquisition pointing out concerns about the debt level of the combined business following the offer.
Moody’s said its evaluation will concentrate on Penn National’s determination and capability to decrease post-acquisition take advantage of and weigh this versus the beneficial longer-term credit benefits connected to increased size, diversity, and economies of scale as an outcome of the deal.