Penn hails ‘milestone’ $2.8bn Pinnacle acquisition
Penn National Gaming has today (Monday) completed its previously announced $2.8bn (£2.1bn/€2.4bn) acquisition of Pinnacle Entertainment, in a move that the company has billed as a “significant milestone” for its growth strategy.
Under the deal, unanimously approved by Penn shareholders in April, the casino operator will take full ownership of Pinnacle and significantly extend its land-based network in the US to 40 facilities across 18 jurisdictions.
The company will now have a presence in Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, and West Virginia.
Penn expects the acquisition to be accretive to its free cash flow per share in the first year after closing, with around $100m in expected annual run-rate cost synergies, excluding one-time transaction costs.
Penn CEO Timothy Wilmott said: “Our acquisition of Pinnacle Entertainment marks a significant milestone in Penn National’s 24-year history of growth as a public company, which has been predicated on our unwavering commitment to deliver exceptional entertainment to customers, support for the local communities where we operate and enhancement of value for our shareholders.
“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.”
Today’s completion also covers related divestitures to Boyd Gaming and various real estate transactions with Gaming and Leisure Properties (GLPI).
This includes the sale and leaseback of the real estate associated with the Penn Plainridge Park Casino in Massachusetts for $250m. This has been added to the Pinnacle master lease assumed by Penn.
In addition, the deal covers the sale of real estate associated with Pinnacle’s Belterra Park to an affiliate of Boyd for approximately $57.7m through funding provided by GLPI to Boyd.
The completion comes amid major movement in the US sports betting market as companies seek to capitalise on the legalisation of such activities in some states, following the Supreme Court ruling on PASPA earlier this year.
Last month, Pinnacle opened its first sports wagering service in Mississippi after the state became the fourth to regulate sports betting since the repeal of PASPA.
Penn is working with William Hill on various sports betting ventures in various states. However, the link-up with Pinnacle looks set to extend Penn’s sports wagering reach into more states and gambling properties.
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