The US Federal Trade Commission (FTC) approved Monday Penn National Gaming’s 2.8bn purchase of Pinnacle Entertainment. After the deal finalizes, Penn will own 78% and Pinnacle - 22% stake.
The merger comes months after Pinnacle’s decision to sell four properties (Belterra Casino Resort in Florence (IN), Ameristar St. Charles (MO), Ameristar Kansas City (MO), and Belterra Park in Cincinnati (OH)) to Boyd Gaming for $575m.
A Negative Impact
The deal stipulates the parties will divest assets in three Midwestern cities, namely St. Louis (MO), Kansas City (MO), and Cincinnati (OH), not later than ten days after the acquisition’s completion. Penn expects the latter to happen early in the Q4, according to representatives.
It also addresses FTC’s concerns that the merger of two major companies would have a “negative impact” on competition. And well it may, once merged, the company will own ca. 53,500 slot machines, 1,300 table games, and 8,300 hotel rooms countrywide.
Market Consolidation
Growing competition concerns have inspired a number of consolidation deals of late. E.g., The Penn-Pinnacle agreement closely follows Eldorado Resort’s $1.85bn acquisition of Tropicana Entertainment. After the deal finalizes, Eldorado will own ca. 27,500 slot machines and 800 table games.
Another example is Caesars Entertainment. The company bought Centaur Holdings for $1.7bn in July. The deal has seen Caesars add two more properties to its portfolio (Indiana Grand Racing and Casino and Hoosier Racing and Casino).
Other mergers are likely to take place in the near future. Land-based casinos feel the growing competition all too well. The legalization of casino gambling/sports wagering and the impact of the online gambling industry are only some of the causes for concern.
Source:
“FTC approves Penn National's Purchase of Pinnacle with Divestitures”, reuters.com, October 2, 2018.
