US casino operator Penn National Gaming said on Monday it would buy Pinnacle Entertainment in a cash and stock deal valued at about $2.8 billion to create a larger-scale gaming platform.
Pinnacle’s shareholders will receive $20.00 in cash and 0.42 shares of Penn National common stock for each Pinnacle share.
According to Reuters calculations, the $32.47 per share offer represents a premium of 48.5 percent to Pinnacle’s share close on Oct. 4, a day before the Wall Street Journal first reported on the merger talks.
After the deal, Penn National will operate a combined 41 properties with about 53,500 slots, 1,300 tables and 8,300 hotel rooms. Pinnacle owns and operates 16 gaming and entertainment facilities in 11 jurisdictions across the United States.
Penn National said Boyd Gaming would buy four of Pinnacle’s assets for $575 million in cash.
The Pinnacle deal is expected to generate $100 million in annual run-rate cost savings and would add to Penn National’s free cash flow in the first year.
After the deal, Penn National will own 78 percent of the combined company, while Pinnacle will own the rest.
Goldman Sachs was the lead financial adviser and BofA Merrill Lynch was the financial adviser to Penn National. JP Morgan was advising Pinnacle.
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