REPORT FROM THE U.S.—Pinnacle Entertainment plans to achieve its goal of increasing market diversification through its announced $2.8-billion acquisition of Ameristar Casinos.
The deal, which was announced Friday and includes $1.9 billion in assumed debt, would nearly double Pinnacle’s portfolio in the United States. The casino-resort operator will add eight properties and approximately 2,400 rooms to its existing portfolio of nine properties and approximately 2,600 rooms. The deal is expected to close by the end of the third quarter of 2013.
During a conference call with analysts, Pinnacle CEO Anthony Sanfilippo said he is not bearish on the markets in which his company is operating, but rather he views the deal as complementing the group’s existing portfolio.
“We think of it as a natural extension of the progress we’ve been making,” Sanfilippo said. The gaming company would enter new states in Nevada, Colorado, Iowa and Mississippi.
Gordon R. Kanofsky, CEO and director at Ameristar, said the deal adds value for shareholders. Sanfilippo said he does not foresee any regulatory issues that could trip up the closing process.
“It’s been spirited at times,” Kanofsky said of the negotiations between the two companies, “but we’re very pleased to reach this day.”
Ameristar’s stock price as of approximately 11:40 a.m. Eastern Standard Time was up nearly 20% to $26.43 per share. Year to date, the company’s stock is up more than 50%. Pinnacle, meanwhile, saw its stock grow by more than 20% on the day, and is up nearly 60% year to date.
The deal between the two companies was valued at $26.50 per Ameristar share.
Regarding future development plans, Sanfilippo was asked during the call if this deal would propel the company into the Las Vegas market for the first time.
“That’ll be something we’ll evaluate … but that’s not our immediate focus,” he said.
Executives also said they might consider consolidating as a real estate investment trust at some point, but did not provide further details. Executives of both companies stated several times that the short-term focus is to close the deal in front of them.
“By linking together Pinnacle and Ameristar properties, we are really creating a terrific portfolio,” Sanfilippo said.