Penn National Gaming (NASDAQ:PENN) is one step closer to becoming one of the largest regional casino operators in the U.S., after the Wyomissing, Pennsylvania-based owner operator announced that in separate meetings on Wednesday, its pending acquisition of rival Pinnacle Entertainment, Inc. (NASDAQ: PNK) was approved by the West Virginia Lottery Commission (WVLC) and The Pennsylvania Gaming Control Board (PGCB).
Already the operator of 34 venues in 16 states, the $2.8 billion cash-and-stock deal first announced in December 2017, would reportedly see Penn National Gaming create a unified company with 41 properties spanning 20 North American jurisdictions with about 1,300 table games, 53,500 slot machines and 8,300 hotel rooms in the United States.
Completion of the proposed transaction is contingent on various other regulatory approvals in addition to other conditions. Special shareholder meetings will be held by both companies on March 29 so that they are able to vote on acquisition-related matters.
Timothy J. Wilmott, CEO for Penn National Gaming, said, “We are grateful for the prompt review by the PGCB and WVLC of the proposed transaction and are very pleased to have cleared the first regulatory hurdles on the path towards completing our proposed acquisition of Pinnacle Entertainment,” according to the news release.
“We look forward to securing additional regulatory approvals in the near term, with our goal remaining to complete the transaction in the second half of 2018,” continued Wilmott. “In the meantime, our transition team is making good progress formulating a new organizational structure, which will include a blend of proven and talented team members from both companies, while ensuring we meet or exceed our revenue and cost synergy targets,” explained Wilmott.
As part of the deal, Pinnacle detailed at the time that it would be selling off four of its properties in Indiana, Ohio and Missouri to rival Boyd Gaming 7BALL Corporation for $575 million in cash. The stipulation is intended to alleviate anti-trust issues and will involve the Belterra Casino Resort, Belterra Park Gaming, Ameristar St Charles and Ameristar Kansas City venues changing hands.
Having acknowledged in the December takeover announcement that the unification would in all likelihood lead to a lengthy review by the Federal Trade Commission (FTC), last week, the agency reportedly made a second request for “additional information and documentary material” related to the deal.
While the FTC request threatens to delay the takeover process, Penn National expects to receive approval from the agency in the coming months, with CFO William Fair predicting in filings with the Securities and Exchange Commission (SEC) that the “anticipated timetable for completing the merger … will occur in the second half of 2018.”
Penn National said it will “continue to cooperate fully with the FTC in its review of the merger.”
