Submitted by Fox First at Ten on December 21st
LAS VEGAS (AP) - In a deal that would more than double its size, Pinnacle Entertainment said Friday that it will buy rival Ameristar Casinos for about $869 million, plus take on $1.9 billion of its debt.
Pinnacle owns seven U.S. casinos and a racetrack, and is developing another gaming property. Ameristar has eight casinos in the United States. The company said buying Ameristar could help it become a bigger player in the gaming industry, while trimming some costs.
U.S. casinos have struggled to recover from the recession as consumers watch spending. Larger U.S. casino companies have increasingly relied on their properties in Asia for profits.
If the deal is approved by shareholders and regulators, Pinnacle will pay $26.50 for each share of Ameristar Casinos Inc. That's a 20 percent premium over the company's Thursday closing stock price of $22.07. It's also gaining $116 million of the company's cash.
Ameristar shares jumped 20 percent to close at $26.50 Friday, while Pinnacle shares rose 21.3 percent to $16.20.
The deal, which is expected to close by the end of the third quarter, has been approved by the boards of both Las Vegas operators. Pinnacle said it has received a financing commitment.
Pinnacle Entertainment Inc. said the acquisition would save it at least $40 million a year and boost earnings.
Pinnacle has casinos in Louisiana, Missouri and Indiana. It's developing another property in Ohio, and also has a racetrack in the state. Ameristar's holdings include casinos in Missouri, Iowa, Colorado, Mississippi, Indiana and Nevada. If the two companies had already been combined into one, it would have generated $2.4 billion in revenue in the 12 months through September, Pinnacle said.
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