Penn National Gaming completed its acquisition of Pinnacle Entertainment. The transaction further enhances Penn National’s position as North America’s leading regional gaming operator, with 40 facilities in 18 jurisdictions. In aggregate, Penn National will now operate more than 49,000 gaming machines, 1,200 table games and nearly 9,000 hotel rooms, and employ more than 30,000 team members. The acquisition is expected to be accretive to Penn National’s free cash flow per share in the first year after closing with approximately $100 million in expected annual run-rate cost synergies and excluding one-time transaction costs.
Timothy J. Wilmott, CEO of Penn National, commented, “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.”
Penn National acquired all of the outstanding shares of Pinnacle through a public company merger for consideration of $20.00 in cash and 0.42 shares of Penn National common stock for each Pinnacle share. In connection with the transaction, Boyd Gaming purchased Pinnacle’s gaming operations at Ameristar Kansas City and Ameristar St. Charles in Missouri; Belterra Casino Resort in Indiana; and Belterra Park in Ohio, for approximately $563.5 million in cash, subject to certain customary closing adjustments.
Concurrent with the closing of the transaction, Penn National entered into an incremental joinder to its existing credit agreement that provides for a $430.2 million senior secured term loan A facility and a $1.1 billion senior secured term loan B facility. The proceeds of these new credit facilities were used to pay the merger consideration, repay certain existing indebtedness of Penn and Pinnacle and to pay related fees and expenses. According to a related 8-K filing, Bank of America served as a letter of credit lender, swingline lender, administrative agent and collateral agent.
Goldman Sachs acted as financial advisor with assistance from Merrill Lynch. Wachtell, Lipton, Rosen & Katz acted as legal advisor to Penn National in connection with the transaction. J.P. Morgan acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom acted as legal advisor to Pinnacle.
