Land and online gambling group Pinnacle’s internet assets should assist Penn National’s ambitions in online gambling following Penn’s just unveiled agreement to acquire Pinnacle for $2.8 billion in cash and stock.
The deal, which has been signed off by both boards of directors, should be completed in the second half of 2018 according to both companies.
It will create a major land and online gambling group; Penn National operates 29 facilities in 17 jurisdictions, including the Tropicana in Nevada and a string of regional Hollywood Casinos around the country, whilst Pinnacle operates 16 facilities in 11 jurisdictions.
The agreement envisages four Pinnacle properties (reportedly not including the online division) being divested to the Boyd gambling group.
Tim Wilmot, CEO at Penn National said the acquisition will enable the combined firms to benefit from enhanced scale and additional growth opportunities, creating a more efficient integrated gaming company.
“Going forward, we will have the financial and operational flexibility to further execute on our strategic objectives, while maintaining our track record of industry-leading profit margins and generating significant cash flow to reduce leverage over time,” he said.
Observers have pointed out that the acquisition also positions Penn National strongly to benefit from any liberalisation of the US sports betting sector, dependent on the ruling of the Supreme Court which is currently considering arguments against the restrictive federal Professional and Amateur Sports Protection Act.
The Penn National press release announcing the deal also appears to emphasise the importance of Pinnacle’s online business, commenting that the combined companies “…will benefit from additional promotional opportunities in online and social gaming, which will help provide an additional boost to property level performance.”