Gambling Stock Roundup: PENN, BYD Announce Buyouts, MLCO Launches Hotel Brand

Week’s Most Important Stories in Detail

Penn National agreed to buy Pinnacle Entertainment Inc. (PNK) for $1.87 billion in cash and stock. Taking into account Pinnacle Entertainment’s debt, the total value of the deal is $2.8 billion. Pinnacle shareholders will get $20.00 in cash and 0.42 shares of Penn National shares for each Pinnacle share they own. This brings the purchase price to $32.47 per Pinnacle share based on Penn National’s closing price as of Dec 15.

As part of the deal, Penn National agreed to sell Pinnacle's gaming operations in Missouri, Indiana and Ohio to Boyd Gaming Corporation for $575 million in cash. The transaction is anticipated to close in the second half of 2018. The deal is expected to yield $100 million in annual run-rate cost savings within 2 years of closing.

Boyd Gaming announced that it will purchase Valley Forge Casino Resort in King of Prussia, Pennsylvania, from Valley Forge Convention Center Partners, L.P., for $280.5 million cash.

The company looks to leverage on the opportunities that opened up upon Pennsylvania's recent passage of gaming expansion legislation. The acquisition is expected to positively impact Boyd’s free cash flow and be immediately accretive to its earnings.

Melco Resorts announced the launch of a luxury hotel brand, NUWA. Scheduled to be launched in Macau and Manila on Jan 16, 2018, the brand launch is in line with the company’s plan to present phase III of City of Dreams Macau in the second quarter of 2018. The brand will substitute the Crown Towers Hotels, which is slated to expire soon.

With the introduction of NUWA, Melco expects to strengthen its operations in City of Dreams. The company believes that an increase in luxury hotel room inventory will bode well for the property's gaming operations. Further, long-term growth at the property will be driven by the company’s core mission to enhance guest experience.

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