Penn National Gaming to Acquire Harrah’s St. Louis for $610 Million in Accretive Transaction
May 07 2012 - 5:45PM
Business Wire
Penn National Gaming, Inc. (PENN: Nasdaq) announced today that
it has entered into a definitive agreement to acquire the stock of
the Harrah’s St. Louis gaming and lodging facility from Caesars
Entertainment (CZR: Nasdaq) for total consideration of
approximately $610 million. The transaction price represents a
multiple of approximately 7.75 times the property’s trailing twelve
month EBITDA (earnings before interest, taxes and depreciation) and
will be funded through an add-on to Penn National’s existing Senior
Secured Credit Facility. While the acquisition is a stock
transaction, for tax purposes, it will be treated as an asset
transaction which Penn National expects will provide tax benefits
that will effectively reduce the purchase multiple to 6.75 times
the property’s trailing twelve month EBITDA. Pro forma for the
completion of the transaction, Penn National Gaming’s total debt to
EBITDA leverage ratio will increase to 3.25 times from 2.75 times
(at March 31, 2012).
The transaction, expected to close in the second half of 2012,
is subject to customary closing conditions and regulatory approvals
and upon closing, Penn National will re-brand Harrah’s St. Louis
with the Company’s Hollywood-themed brand.
Harrah’s St. Louis is located in Maryland Heights, Missouri,
directly off I-70 and adjacent to the Missouri River and
approximately 22 miles northwest of downtown St. Louis,
approximately eight miles west of Lambert St. Louis International
Airport, and approximately 25 miles southwest of the Penn
National’s Argosy Casino Alton. The facility is situated on over
294 acres along the Missouri river and features approximately
109,000 square feet of gaming space with approximately 2,600 gaming
machines and 85 table games (including poker positions), a 500
guestroom hotel, nine dining and entertainment venues and
structured and surface parking for 4,644 vehicles.
Peter M. Carlino, Chief Executive Officer of Penn National,
commented, “The planned addition of Harrah’s St. Louis will further
expand Penn National’s regional operating platform with a facility
that is extremely well-positioned in a large metropolitan market.
Under the terms of the agreement with Caesars, we are required to
re-brand the facility. The re-branding with Penn National’s
Hollywood brand -- which has been successfully introduced at eleven
other properties across the country -- will invoke the glamour of
1930s’ art deco Hollywood. We look forward to working with Caesars
over the upcoming months to ensure a seamless transition for all of
our constituents including customers, employees, vendors and
Missouri regulators.
“This accretive transaction represents yet another way for Penn
National to sensibly leverage its industry-leading balance sheet to
further expand our property portfolio. We believe the addition of
Harrah’s St. Louis highlights our commitment to build shareholder
value through return-focused capital deployment and complements our
existing development pipeline which includes the scheduled opening
of Hollywood Casino Toledo later this month and Hollywood Casino
Columbus later this year along with the recent opening of Hollywood
Casino at Kansas Speedway. We continue to evaluate other domestic
regional gaming opportunities where we can leverage our balance
sheet and proven operating disciplines.”
About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests
in gaming and racing facilities with a focus on slot machine
entertainment. The company presently operates twenty-six facilities
in nineteen jurisdictions, including Colorado, Florida, Illinois,
Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Mississippi,
Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania,
Texas, West Virginia, and Ontario. In aggregate, Penn National's
operated facilities currently feature approximately 29,700 gaming
machines, approximately 665 table games, 2,400 hotel rooms and 1.2
million square feet of gaming floor space. Penn National is also
developing casinos in Toledo and Columbus, Ohio, with openings
targeted for 2012.
Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Actual results may vary materially from expectations. Penn
describes certain of these risks and uncertainties in its filings
with the Securities and Exchange Commission, including its Annual
Report on Form 10-K for the year ended December 31, 2011.
Meaningful factors that could cause actual results to differ from
expectations include, but are not limited to, risks related to the
following: our ability to receive timely regulatory approval for
and to otherwise complete the planned acquisition, including
satisfaction of all conditions precedent set forth in the
definitive purchase agreement; the costs and risks of litigation
and/or exercise of remedies, including the loss of any deposits, as
set forth in the purchase agreement or otherwise in the event that
the transactions contemplated in the purchase agreement are not
consummated; our ability to obtain the financing on acceptable
terms and rates necessary to complete the planned acquisition; our
ability to successfully integrate such acquisition into our
existing business and to achieve the expected returns; our ability
to receive, or delays in obtaining, the regulatory approvals
required to own, develop and/or operate our facilities (which can
result in lost revenue and forfeiture of deposits), or other delays
or impediments to completing our planned projects, including
favorable resolution of any related litigation; our ability to
secure state and local permits and approvals necessary for
construction; construction factors, including delays, unexpected
remediation costs, local opposition and increased cost of labor and
materials; the effects of local and national economic, credit,
capital market, housing, and energy conditions on the economy in
general and on the gaming and lodging industries in particular; and
other factors as discussed in the Company’s Annual Report on Form
10-K for the year ended December 31, 2011, subsequent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K as filed with
the SEC. The Company does not intend to update publicly any
forward-looking statements except as required by law.
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From Apr 2024 to May 2024
PENN Entertainment (NASDAQ:PENN)
Historical Stock Chart
From May 2023 to May 2024