U.S. casino operator Penn National Gaming Inc. will acquire Pinnacle Entertainment Inc. in a cash-and-stock deal valued at $2.8B.
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Pinnacle shareholders will receive $32.47 a share in the transaction in the form of $20 in cash and 0.42 of Penn National's common stock, Reuters reports. As a result, Penn National shareholders will own 78% of the combined company while Pinnacle shareholders will own the remaining 22%.
To avoid regulatory concerns, Pinnacle has agreed to sell four of its Ameristar properties, including the Ameristar Casino Hotel Kansas City and the Ameristar Casino Resort Spa St. Charles, to Boyd Gaming Corp. for $575M. Boyd will then sign a lease agreement with the landlord of Penn National and Pinnacle, Gaming & Leisure Properties Inc., Reuters reports.
Once finalized, the deal will bring Penn's portfolio to 41 properties and 8,300 hotel rooms across the U.S. In addition, Penn expects to see a total annual rent increase of more than $46M.
“The new Penn will be a stronger tenant with expanded geographical diversification and, with anticipated cost synergies, will have increased free cash flow at the parent level versus the current two separate tenants," Gaming & Leisure Properties Inc. CEO Peter M. Carlino said in a statement.
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