Penn National Gaming Completes Pinnacle Acquisition

This Monday saw the finalization of the announced merger of Penn National Gaming and Pinnacle Entertainment. Penn acquired Pinnacle for the final price of $2.8 billion…

…This purchase has been marked as a “significant milestone” for Penn’s growth strategy by company officials.

Expansion of Presence

Taking full ownership of the Las Vegas-headquartered company, Pinnacle, means a lot of things for Penn, but one is significant in particular: they will extend their reach to as many as 18 new jurisdictions – the states where Pinnacle has its venues and casinos…

…These are: Texas and West Virginia.

In total, 40 new venues will be under Penn’s ownership from now on, after the deal, approved by Penn shareholders this April, is now officially wrapped.

Annual run-rate cost synergies arising from this purchase are expected to be in the region of $100 million. Also, the free cash flow per share should be accretive a year after the closing of the acquisition.

“Well Positioned”

Penn’s CEO, Timothy Wilmott commented that the acquisition of Pinnacle Entertainment makes a significant milestone in company’s 24-year history as a public company…

…And he added that this has “been predicated on our unwavering commitment to deliver exceptional entertainment to customers, for the local communities where we operate and enhancement of value for our shareholders.”

Wilmott expressed the opinion that with incremental free cash flow that will be generated due to the base of operations’ expansion, the company is well positioned to “reduce leverage, evaluate additional accretive strategic growth investments and opportunistically return capital to shareholders.”

Seeking to Capitalize on the Moment

The US sports betting market is right now the world’s hottest hub of gaming-related activity after PASPA repeal put states’ fate into their own hands.

Both Pinnacle and Penn were quite active in that regard, with Pinnacle opening their sports betting service in Mississippi while Penn cooperates with William Hill in various venues across the USA.

The completion of the merger also means that real estate belonging to Penn Plainridge Park Casino in Massachusetts is for sale for $250 million and that divestitures to Boyd Gaming and various real estate transactions with GLPI are also covered.

Pinnacle’s real estate belonging to Belterra Park will be sold to $57.7 million to an of Boyd.

In April, Pinnacle partnered with application for their UK license via Twitter announcement.

On the other hand, Penn expanded sports betting services in sportsbook in West Virginia, also in August.

Source:

“Penn hails ‘milestone’ $2.8bn Pinnacle acquisition”, igamingbusiness.com, October 15, 2018.