Pinnacle Entertainment – PNK – To Acquire Ameristar Casinos – ASCA

NYSE: PNK) and Ameristar Casinos, Inc. (Nasdaq GS: ASCA) announced 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.

• Transformative transaction creates a best in class gaming platform with increased diversification and significant efficiencies of scale
• Expected to be accretive to Pinnacle’s free cash flow and earnings per share

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.

About Pinnacle Entertainment – PNK

Pinnacle Entertainment, Inc. (PNK) owns and operates seven casinos, located in Louisiana, Missouri, and Indiana, and a racetrack in Ohio. In addition, PNK 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 – ASCA

Ameristar Casinos (ASCA) is an innovative casino gaming company featuring the newest and most popular slot machines. ASCA has 7,200 dedicated team members who pride themselves on delivering consistently friendly and appreciative service to their guests. ASCA 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.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.