[toc]In a deal amounting to $2.8 billion, gaming company Penn National is going to acquire Pinnacle Entertainment. For the past month or so, rumors of a potential acquisition swirled. The companies made it official with an announcement early Monday morning.
Penn National properties now number 45, but not for long
In the acquisition, Penn National adds 16 properties from the Vegas-based Pinnacle. Penn National currently has a portfolio of 29 casinos. That list includes Hollywood Casino at Penn National in Grantville, PA. It will now also own and operate The Meadows Casino in Washington, PA.
While the portfolio will sit at 45 casinos, that number is not correct for the long term. In part of the ownership transition, Penn is selling the four Ameristar properties acquired from Pinnacle to Boyd Gaming. In the end, Penn will end up with 41 casinos. Boyd will pay $575 million for the quaret of properties.
Chief Executive Officer of Penn National Gaming Timothy Wilmott offered his thoughts on the deal in a press release:
“By combining our highly complementary portfolios and similar operating philosophies, we will be able to leverage the strengths of both our companies and create an unparalleled experience for our regional gaming customers, while generating significant value for our shareholders and business partners.”
Both Penn National and Pinnacle are nationwide gaming companies. However, unlike MGM Resorts, Caesars, or Sands Corp., the companies focus on regional casinos. Penn National estimats $100 million in synergetic revenue annually once the deal closes.
Pinnacle is best known for its Hollywood and Ameristar brands. Other brands under the umbrella include Boomtown and Belterra.
Pinnacle currently employs 16,000 people
Penn National is based out of Pennsylvania. Pinnacle, on the other hand, has its headquarters in Las Vegas, Nevada. Given how early the companies are in the acquistion process, it is unclear how many of the 16,000 Pinnacle employees will transition over to Penn National.
Most of the jobs are thankfully at the casino level and should not change. However, the Las Vegas Pinnacle corporate office will likely undergo major overhauls as part of the deal.
Nonetheless, Pinnacle CEO Anthony Sanfillippo is excited about the company’s future:
“Pinnacle is a terrific company whose success is due to the efforts of our more than 16,000 team members that focus every day on providing great service and memorable experiences for our guests. Tim and the Penn National team lead a high-quality organization that, like Pinnacle, has a long track record of operational excellence and accretive growth. We believe the combination will produce an even stronger gaming entertainment platform that builds on the individual accomplishments of both companies and benefits our collective team members, shareholders and guests.”
How will this affect Pennsylvania casinos?
Thanks to the new gambling expansion laws, Penn National can now own two Pennsylvania casinos without any major issues.
The company was previously a contender for the forthcoming Stadium Park casino in Philadelphia. The project’s current owners, The Cordish Company, had trouble beginning construction on the project because laws forbid certain groups to have ownership stakes in more than one casino in the state.
With the new laws signed into effect last month, the plaintiffs dropped their lawsuit against the Philadelphia casino because the new laws removed those ownership concerns.
As such, there is nothing holding Penn back from owning both Hollywood Casino and The Meadows.
Where it will be interesting to see how the acquisition pan out is the bidding process for mini casinos across the Keystone State. Both Pinnacle and Penn National were likely candidates to bid on facilities.
Much of the reasoning behind satellite casino expansion was to protect their existing casino assets. Now that there is only one company, not two, vying for one of the ten properties, it could affect how many satellite properties get bid on and approved.
As for the rest of the gambling expansion bill? Well, Penn went on record with several aspects of the bill it did not like, including high tax rates on online casinos. It is also considering a lawsuit against the state.
Currently the number of online casino licenses is equivalent to the number of casinos. Should Penn opt out of online gaming, that would open up not one, but two commercial online casino licenses to potential out-of-state bidders.