Two casino companies completed their multi-billion-dollar remake of regional gaming Monday and solidified their places as the top two operators in the market.
Penn National Gaming finalized its $2.8 billion purchase of 12 casinos operated by Las Vegas-based Pinnacle Entertainment. The transaction gives Wyomissing, Pennsylvania-based Penn control of 40 casinos and racetracks in 18 states.
As part of the deal, Las Vegas-based Boyd Gaming agreed to acquire the operations of four Pinnacle casinos in three states for $575 million to alleviate any federal anti-trust issues with the deal. The company now operates 29 casino properties in 10 states
Penn and Boyd lease the operations of the Pinnacle casinos from real estate investment trust Gaming and Leisure Properties, which owns the land associated with the resorts.
The Penn-Pinnacle transaction first announced late last year, had to be approved by 14 different state gaming authorities and the Federal Trade Commission. It capped a wild year of mergers and acquisitions in the regional gaming space, which included deals that involved Reno-based Eldorado Resorts, which now has 26 casinos in 12 states.
“Our acquisition of Pinnacle Entertainment marks a significant milestone in Penn National’s 24-year history of growth as a public company,” Penn National CEO Tim Wilmott said in a statement.
Penn National still has one transaction pending – the company is teaming up with real estate investment trust VICI Properties to jointly acquire Margaritaville Resort Casino in Bossier City, Louisiana for a total value of $376 million.
During the Global Gaming Expo last week in Las Vegas, Penn executives told Sun Trust gaming analyst Barry Jonas the company was working through the $100 million in cost savings it expects from the Pinnacle transaction.
“Interestingly, management was excited about the prospect of leveraging Penn’s interactive business for topline synergies,” Jonas told investors. “That said, the majority of topline synergies is expected to come from cross-property promotions as expected.”
Penn National representatives told the Nevada Gaming Commission this month the company will retain Pinnacle’s corporate headquarters in Las Vegas. Penn owns Tropicana Las Vegas and M Resort in the city of Henderson and is acquiring the Horseshu and Cactus Pete’s in the community of Jackpot near the Idaho border from Pinnacle.
Penn will now operate more than 49,000 gaming machines, 1,200 table games, nearly 9,000 hotel rooms, and employ more than 30,000 people companywide.
“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. CEO Keith Smith and the company’s 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.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
