Done Deals

“If you’re an entity that owns one to five properties, it becomes harder and harder to compete,”

says Katz, “and in that regard, those entities capitulate and sell, particularly if they can get a good multiple.”

They’re getting them, too.

The industry has seen more than $12 billion of M&A activity the last couple of years.

Penn National (Nasdaq: PENN), Boyd Gaming (NYSE: BYD) and Eldorado Resorts (Nasdaq: ERI) have accounted for more than $10 billion of it.

The REITs figure prominently in most of these deals.

The current wave was launched in December with the announcement that PENN had concluded a $2.8 billion.

deal to acquire regional rival Pinnacle Entertainment (NASDAQ: PNK),

Whose 15 casinos and racinos in nine states had been acquired by Gaming & Leisure Properties the year before for $4.8.

Billion in cash and GLPI stock, essentially making Penn and Pinnacle sister companies.

Penn National gets 11 of these properties, comprising 17,700 machine games, 525 table games and 3,570 hotel rooms in seven states,

And access to an array of new markets: New Orleans, Baton Rouge, Lake Charles, Black Hawk, Vicksburg and Chicagoland.

Pinnacle shareholders get $20 in cash and 0.42 shares of PENN for each of their Pinnacle shares,

An implied value of $32.47 per share, by Penn’s reckoning, representing a hefty 36 percent premium to where.

PNK was trading at the time word of the merger talks leaked to the media back in October.

Concurrent with the deal’s closing in the second half, Penn will sell its Plainridge Park racino in Massachusetts to GLPI for $315 million.

GLPI also gains a new tenant in Las Vegas-based Boyd Gaming, which is paying $575 million to expand into the St.

Louis, Kansas City and Cincinnati markets with the purchase of four Pinnacle casinos.

Factoring in these sale-leasebacks, adjustments to its master lease with GLPI and a projected $100 million in synergies over.

The next two years, Penn figures it effectively paid $1.71 billion for Pinnacle, a relatively modest 6.6 times EBITDA for the previous 12 months.

It emerges a 40-property behemoth with casinos and racinos in 20 jurisdictions in 16 states and Ontario,

Canada—53,000-plus slots, 1,300 table games and some 8,000 hotel rooms—and a VGT operation spread across more than 300 locations in Illinois.

At the same time that details of the Penn-Pinnacle merger were unfolding, Boyd announced it was entering the Philadelphia market with the acquisition of Valley Forge Casino Resort for $280.5 million in cash.

In May, the company snapped up an Illinois VGT operator called Lattner Entertainment Group.

Between the Pinnacle and Valley Forge deals, Boyd has added 369,000 square feet of casino space to a nationwide portfolio.Now comprised of 29 casinos in 10 states—an additional 6,600 slots, 240 tables and more than 1,700 rooms.

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