Penn National Gaming has entered into a definitive agreement to acquire RIH Acquisitions MS I and RIH Acquisitions MS II, the holding companies for the gaming operations of Bally’s Casino Tunica and Resorts Casino Tunica, for total consideration of approximately $44m cash.
With a purchase multiple of 3.7x trailing twelve months adjusted earnings before interest taxes depreciation and amortization after master lease payments, and a lower post-synergies pro-forma multiple, Penn National believes this transaction further supports the Company’s goal of enhancing shareholder value.
Timothy J. Wilmott, Penn National’s President and Chief Executive Officer, stated, “We are pleased to partner with Gaming and Leisure Properties to structure this tuck-in transaction which will be immediately accretive to our operating results upon closing. The acquisition will add two complementary casinos to our existing Hollywood Casino Tunica operations thereby presenting Penn National with the opportunity to benefit from a centralised local management structure. We intend to make modest cap-ex investments at the newly acquired casinos to elevate the guest experience while implementing our Marquee Rewards player loyalty program to allow guests to access Penn National’s growing portfolio of properties including our Tropicana Las Vegas resort.”
Following the completion of the proposed transaction, Penn National will operate both Tunica properties and lease the underlying real property associated with these two businesses from Gaming and Leisure Properties pursuant to the terms of the Company’s existing Master Lease with GLPI, with total initial annual rent of $9.0 million subject to the provisions included in the terms of the Master Lease. On a combined basis, Bally’s Casino Tunica and Resorts Casino Tunica generated adjusted EBITDA of approximately $21.0 million for the twelve month period ended December 31, 2016.
Bally’s Casino Tunica, the closest Tunica-area casino to downtown Memphis, features a 40,000 square foot casino with 947 slot machines and 16 table games, along with a steakhouse, buffet restaurant, 24-hour café, and a live entertainment venue. Resorts Casino Tunica, which is located adjacent to Penn National’s existing Hollywood Casino Tunica, features a 35,000 square foot casino with 800 slot machines and 9 table games. The property also offers a steakhouse, buffet restaurant and 24-hour café as well as 18,000 square feet of meeting and event space and a 201-room hotel.
The transaction, expected to close in the second quarter of 2017, is subject to the approval of the Mississippi Gaming Commission and other customary closing conditions.
Penn National Gaming, through its subsidiaries, owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment. The company presently operates twenty-seven facilities in eighteen jurisdictions, including Florida, Illinois, Indiana, Iowa, Kansas, Maine, Massachusetts, Maryland, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario. In aggregate, Penn’s operated facilities feature approximately 31,000 gaming machines, 800 table games and 2,900 hotel rooms.