Daily Racing Form National Digital Edition
Penn National to purchase Pinnacle
Penn National Gaming Inc. has reached an agreement to buy a similar gambling-property owner and operator, Pinnacle Entertainment Corp., in a transaction valued at $2.8 billion, according to a Monday announcement from the companies.
If approved by shareholders, the combined companies will own and operate more than 40 gambling facilities in North America, including racetracks and racetrack-casinos in Louisiana, Texas, Pennsylvania, New Mexico, Ohio, and West Virginia. In a related transaction, Penn National also said that it has reached an agreement to sell Pinnacle’s Belterra Park in Ohio along with other properties to Boyd Gaming as part of the deal.
Pinnacle is the majority owner of Retama Park’s racing operations and also owns the Meadows harness track in Pennsylvania.
Under the terms of the deal, shareholders in Pinnacle will receive $20 for each share of the company that they own, plus 0.42 shares of the combined company. The companies said that the payout represents a 36 percent premium over the price of Pinnacle stock as of the date of the announcement.
Penn National said that it would use proceeds from the Boyd agreement, its own cash, and “new debt financing” for the transaction. As of Sept. 30 of this year, Penn National had $1.32 billion in debt, according to its financial statements.
“Penn National anticipates that the additional cash flow resulting from the acquisition will allow it to pay down debt on an accelerated basis after closing,” the company said in a statement.
In 2013, Penn National spun off its properties into a separate publicly traded company for tax advantages, and those advantages are expected to become more valuable under the tax bill recently negotiated by Republican leadership in Congress. Under the structure, Penn National pays rent to the real-estate company Gaming and Leisure Properties, which absorbs some of Penn National’s depreciation and amortization expenses, plus other costs.
The companies said that they expected the deal to close in the second half of 2018.