In what is sure to be one of the biggest gaming mergers of the last 10 years, it was announced today that Pennsylvania-based Penn National Gaming would be purchasing Pinnacle Entertainment in a deal that is rumored to be worth roughly $2.8 billion. The cash and stock deal was first talked about back in October, however few details emerged at the time.
Now, we know that all owners of Pinnacle stock will receive a flat rate of $20 per share as well as .42 shares of Penn National common stock as a result of the sale. This should make plenty of Pinnacle shareholders happy, as it is quite the mark-up from the share’s worth alone.
Penn National Gaming is a company that was founded in Eastern Pennsylvania more than 40 years ago. Despite its headquarters’ location, Penn National owns gambling properties across the United States, mostly in the middle of the US. States like Mississippi, Indiana, Missouri, and Illinois all have casinos owned and operated by Penn National. Prior to the merger with Pinnacle, Penn National owned more than 20 total properties, including casinos, racinos, and horsetracks.
By itself, Pinnacle could lay claim to more than 20 properties, so it is clear to see that this merger just about doubles Penn National’s share of the US casino market. With properties in many of the same places where Penn National exists, the merger seems to be a strategic one for Penn National. This does not make Penn National the biggest gaming company in the United States, but it does mean that they are one step closer to dominating regional gaming markets. When we talk about regional gaming markets, we are talking about casino industries that exist outside of places like Atlantic City and Las Vegas, and also are typically away from massive metropolitan areas as well.
As part of the merger between Penn National and Pinnacle, Pinnacle was forced to sell off 4 Ameristar properties to a company called Boyd Gaming Corp. This move was made in an effort to avoid any regulatory headaches that might have arisen from a merger as large as this one.
When all is said and done, Penn National will completely or partially own 41 total properties, comprised of more than 50,000 slot games, more than 1,300 table games, and in upwards of 9,000 hotel rooms. For a company that is headquartered thousands of miles away from the gambling mecca that is Las Vegas, that is truly remarkable. With changes to tax law in the United States seemingly right around the corner, Penn National executives have hinted that this merger is just the beginning, and that their company may grow even more in the coming years. Gaming analysts agree, and say that in the next 12 months we may see a significant number of mergers and acquisitions, the likes of which will be similar to, if not bigger than, the Penn National/Pinnacle merger.