Pinnacle Entertainment owns several casinos in Louisiana. It agreed to buy Ameristar Casinos for $869 million. The deal would give Pinnacle a casino each in Mississippi and in Louisiana. The deal has already been approved by both operators’ boards. It is expected to close in the third quarter of 2013.
Aside from Ameristar’s eight casinos, Pinnacle will also get $1.9 billion in debt and $116 million in cash on hand. This would bring its total enterprise value to $2.8 billion. It would make Pinnacle Entertainment more than double its size.
Pinnacle said that acquiring Ameristar would help it be a bigger player in the gaming industry. At present, it has casinos in Louisiana, Indiana, and Missouri. It is developing a property in Ohio and has a racetrack in the said state.
Ameristar have casinos in Missouri, Colorado, Iowa, Mississippi, Nevada, and Indiana. Once the two companies are combined, it would have estimated revenue of $2.4 billion in the 12 months through September.
Casinos in the United States struggled to recover from the recession as consumers still have a tight budget. Larger casino companies have relied on their properties in Asia for their profits.
If the deal gets the approval of the regulators, Pinnacle will have to pay $26.50 for every share of Ameristar Casinos. That’s 20 percent higher over the company’s stock price of $22.07 at the close of trading Thursday.
Pinnacle and Ameristar shares went up after the announcement of the news. Pinnacle said that it has already received a financing commitment. The company said that the deal would save it around $40 million per year and improve its earnings.
Pinnacle and Ameristar have combined revenue of $2.35 billion in 2011. It was just a bit lower to Penn National’s revenue of $2.74 billion. Las Vegas Sands Corp is the biggest casino operator in the US with $9.41 billion.
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