updated: 12/21/2012 2:25:04 PM
The owner of the Ameristar Casino Hotel in East Chicago has been purchased. Ameristar Casinos Inc. (Nasdaq: ASCA) has been acquired by Las Vegas-based Pinnacle Entertainment Inc. (NYSE: PNK) in a nearly $870 million deal. Pinnacle also owns the Belterra Casino Resort & Spa in southeast Indiana.
December 21, 2012
Las Vegas, Nev. -- Pinnacle Entertainment, Inc. (NYSE:PNK) and Ameristar Casinos, Inc. (Nasdaq:ASCA) announced today that the companies have entered into a definitive agreement under which Pinnacle will acquire all of the outstanding common shares of Ameristar for $26.50 per share in cash, for a total enterprise value of $2.8 billion, including debt of $1.9 billion and cash on hand of $116 million as of September 30, 2012. This consideration represents a premium of 45% over the average closing price of Ameristar common stock for the 90 days ended December 20, 2012. The transaction has received the unanimous approval of both the Ameristar and Pinnacle Boards of Directors.
Pinnacle will benefit from increased operational and geographic diversity by more than doubling in size to 17 operating properties in 13 distinct geographies. The acquisition of Ameristar's properties will complement Pinnacle's existing portfolio by adding eight casino-resorts in some of the nation's best gaming markets, including: St. Charles near St. Louis, MO; Kansas City, MO; Council Bluffs, IA; Black Hawk, CO; Vicksburg, MS; East Chicago, IN; and Jackpot, NV.
The consideration represents an EBITDA multiple of 7.6x Ameristar's Adjusted EBITDA of $365 million for the trailing 12-month period ended September 30, 2012, excluding synergies Pinnacle expects to achieve. The combined enterprise would have generated net revenue of $2.4 billion and Combined Adjusted EBITDA of $649 million (excluding $40 million of synergies Pinnacle expects to achieve), over the trailing 12-month period ended September 30, 2012.
Anthony Sanfilippo, President and Chief Executive Officer of Pinnacle Entertainment commented, "The acquisition of Ameristar is a transformative transaction for Pinnacle that will provide us the scale and diversification to more effectively compete. The coupling of Pinnacle and Ameristar properties will create a terrific portfolio of quality assets to serve our combined guests. Over recent years, we have made tremendous progress at Pinnacle in providing a higher level of service to our guests and improving our financial performance. We are thrilled about the opportunities that will be created by combining the two companies. Both companies have developed cultures where team members are focused on providing a high quality experience to their guests and delivering outstanding financial outcomes for their shareholders. Our operating philosophy and cultures are perfectly aligned.
"We believe the transaction represents a uniquely attractive opportunity for Pinnacle and its shareholders given the significantly improved geographic and operational diversification of the combined portfolios," continued Mr. Sanfilippo. "In addition, we believe there is considerable opportunity to expand reach and generate synergies and efficiencies of scale from the increased size of the combined company, as well as an opportunity to drive property margin expansion by applying best practices garnered from both Pinnacle and Ameristar across the combined enterprise. As a result of the combination, we expect to achieve synergies and efficiencies of scale of at least $40 million annually, with potentially greater realization as we move forward through the integration process. Finally, we expect the acquisition of Ameristar to be accretive to our free cash flow and earnings per share following the closing, and for it to provide increased long-term strategic and financial flexibility. We are confident this transaction will drive long-term value for Pinnacle's stakeholders."
Gordon Kanofsky, Chief Executive Officer of Ameristar Casinos commented, "We are excited to have reached this agreement with Pinnacle as this transaction maximizes value for our shareholders and provides them with a significant and immediate premium. We are focused on ensuring a smooth transition and look forward to working with the Pinnacle team. The increased scale and diversification of the Company will expand opportunities for our team members and provide enhancements for our guests."
The transaction is subject to customary closing conditions, approval by Ameristar's shareholders and required regulatory approvals. Pinnacle expects the transaction to close by the end of the third quarter of 2013. Pinnacle has obtained committed financing for the transaction and the transaction is not subject to a financing contingency.
Financial and Legal Advisory
Goldman, Sachs & Co. served as the exclusive financial advisor and Morrison & Foerster LLP served as the legal advisor to Pinnacle. J.P. Morgan and Goldman, Sachs & Co. provided the committed financing for the transaction.
Lazard and Centerview Partners LLC served as financial advisors to Ameristar and Gibson Dunn & Crutcher LLP served as legal counsel to Ameristar.
Investor Conference Call
Pinnacle and Ameristar will host a joint conference call for investors today, Friday, December 21, 2012, at 9:00 a.m. (Eastern Time) / 6:00 a.m. (Pacific Time) to discuss the proposed acquisition. Investors can listen to the call by dialing (706) 679-7241. The code to access the conference call is 84097297. Investors may also listen to the conference call live over the Internet at either www.pnkinc.com or www.ameristar.com. A presentation that will be discussed on the call will be available in the Investor Relations section of Pinnacle's website.
A replay of the conference call will be available shortly after the conclusion of the call through January 4, 2013 by dialing (404) 537-3406. The code to access the replay is 84097297. The conference call will also be available for replay at www.pnkinc.com.
About Pinnacle Entertainment
Pinnacle Entertainment, Inc. owns and operates seven casinos, located in Louisiana, Missouri, and Indiana, and a racetrack in Ohio. In addition, Pinnacle is redeveloping River Downs in Cincinnati, Ohio into a gaming entertainment facility and holds a 26% ownership stake in Asian Coast Development (Canada) Ltd. (ACDL), an international development and real estate company currently developing Vietnam's first large-scale integrated resort on the Ho Tram Strip.
About Ameristar Casinos
Ameristar Casinos is an innovative casino gaming company featuring the newest and most popular slot machines. Ameristar has 7,200 dedicated team members who pride themselves on delivering consistently friendly and appreciative service to their guests. Ameristar continuously strives to increase the loyalty of its guests through the quality of its slot machines, table games, hotel, dining and other leisure offerings. Ameristar's eight casino hotel properties primarily serve guests from Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska and Nevada. Ameristar has been a public company since 1993, and its stock is traded on the Nasdaq Global Select Market. Ameristar generates more than $1.1 billion in net revenues annually.
Source: Pinnacle Entertainment Inc.