Penn National Gaming said it will buy Pinnacle Entertainment for $2.8 billion in a cash and stock transaction to diversify geographically and to cut costs.
Under the deal, Pinnacle shareholders will receive $20 in cash and 0.42 of a Penn National share for each Pinnacle share owned, implying a total cost of $32.47 a share, based on Penn’s closing price on Dec. 15.
Penn said the transaction reflects a 36 percent premium for Pinnacle shareholders and the transaction has been approved by the boards of both companies.
Pinnacle operates 16 gaming facilities in 11 jurisdictions across the U.S. Following the acquisition, four Pinnacle properties will be sold to Boyd Gaming.
Penn will end up owning 41 properties in 20 jurisdictions. The transaction is expected to generate about $100 million in annual run-rate cost synergies.
“By combining our highly complementary portfolios and similar operating philosophies, we will be able to leverage the strengths of both our companies and create an unparalleled experience for our shareholders and business partners,” Penn National CEO Timothy Wilmott said.
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