Twenty months ago, Pinnacle Entertainment CEO Anthony Sanfilippo wanted the Las Vegas-based regional casino operator to buy rival Penn National Gaming. He suggested a deal in a letter to Penn National CEO Tim Wilmott.
Three weeks later, Penn rejected the buyout offer. However, company executives thought a merger between the two regional companies was a good idea.
“We couldn’t agree more that the combination was compelling. We just thought we should be the buyer,” Penn National General Counsel Carl Sottosanti told the Nevada Gaming Control Board Wednesday.
The Control Board and the Nevada Gaming Commission – meeting in two special hearings in Las Vegas and Carson City – approved Penn National’s $2.8 billion acquisition of Pinnacle. Two of the 11 Pinnacle casinos Penn National is acquiring are in Nevada – the Horseshu and Cactus Pete’s in the community of Jackpot near the Idaho border.
Nevada is the 14th regulatory jurisdiction to sign off on the deal. The Federal Trade Commission approved the deal on Monday.
In a statement following the hearings, Wilmott said Nevada was the state approval needed and the company expects to close transaction in “mid-October.”
Nevada gaming regulators had minimal comments on the transaction. The Control Board meeting took all of 37 minutes and the Gaming Commission’s discussion lasted roughly 20 minutes. Commission Chairman Tony Alamo Jr. and Commission Member Phil Pro asked a few questions about fines the Penn National received in Illinois and Massachusetts.
Gaming regulators waived the appearances of Penn’s top executives, Wilmott and COO Jay Snowden.
“We’re seeing these mergers all over the place, but these are important moves,” Alamo said. “If done correctly, you can win or lose the game. Penn is buying Pinnacle, but this is a merger.”
In Nevada, Penn National owns the Tropicana Las Vegas and M Resort in the city of Henderson. Sottosanti said the company will also retain Pinnacle’s corporate headquarters in Las Vegas.
After adding Pinnacle’s 11 remaining casinos, Penn National will become the largest U.S. regional gaming operator with 41 properties in 20 jurisdictions.
Real estate investment trust Gaming and Leisure Properties is the landlord for the Pinnacle-owned resorts. GLPI, which was spun off from Penn in 2013, will leases the operations back to Penn.
When the Penn-Pinnacle deal was announced last December, Boyd Gaming Corp., agreed to acquire the operations of Pinnacle’s two Ameristar casinos in Missouri and the Belterra gaming brands in Indiana and Ohio for $575 million. Boyd will sign a lease agreement with
The deal was done to alleviate potential federal antitrust issues. The FTC, in a statement posted to the FTC website, said Boyd Gaming’s acquisition of the casinos in Cincinnati, St. Louis and Kansas City eased any concerns about competition in those markets.
Shareholders of both companies approved the transaction in March.
In a research note Wednesday, Deutsche Bank gaming analyst Carlo Santarelli said performance trends at Pinnacle’s casinos have “largely solid” said the transaction was announced. He said there was also confidence that Penn could achieve $100 million in cost savings over the first two years after the deal closes.
In June, Penn National and real estate investment trust VICI Properties announced they will jointly acquire Margaritaville Resort Casino in Bossier City, La., for a total value of $376 million.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
