Penn National Gaming is buying Pinnacle Entertainmet in a cash and stock transaction valued at approximately $2.8 billion.
Penn National, which is based in Berks County, has 29 properties. Pinnacle, which is based in Las Vegas, has 16 properties. A combined company would have more than $5 billion in revenue, The Associated Press has reported.
Under the deal, Penn National will assume the existing master lease and Pinnacle's existing lease for the Meadows Casino and Racetrack in Pennsylvania.
Following the acquisition of Pinnacle and the planned divestiture of four of its properties to Boyd Gaming Corporation, Penn National will have a combined 41 properties in 20 jurisdictions throughout North America, according to a press release.
The transaction is expected to generate $100 million in annual run-rate cost synergies following integration and is anticipated to be immediately accretive to free cash flow in the first year, the statement said.
“By combining our highly complementary portfolios and similar operating philosophies, we will be able to leverage the strengths of both our companies and create an unparalleled experience for our regional gaming customers, while generating significant value for our shareholders and business partners,” Timothy J. Wilmott, Chief Executive Officer of Penn National said.
Regarding Boyd, Penn National has entered into an agreement in which Boyd will purchase 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 $575 million in cash. These divestitures are anticipated to occur immediately prior to, and are conditioned upon, the completion of the Pinnacle acquisition.
The transaction is subject to approval of the shareholders of Penn National and Pinnacle, the approval of applicable gaming authorities, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act and other customary closing conditions. The companies expect the transaction to close in the second half of 2018.
Upon completion of the transaction Penn National and Pinnacle shareholders will hold 78 percent and 22 percent, respectively, of the combined company's outstanding shares, the press release said.
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