Boyd to acquire Peninsula Gaming for US$1.45bn
Deal will see casino giant take over five properties in Louisiana, Iowa and Kansas
Boyd Gaming has announced that it has reached an agreement to acquire land-based casino and racetrack operator Peninsula Gaming for total consideration of US$1.45bn (£912m).
The deal sees the gaming group diversify its casino offering away from Las Vegas and Atlantic City and extend its portfolio into the Midwest and Louisiana.
It will take over five casinos: Kansas Star Casino near Wichita, Kansas; Diamond Jo Casino in Dubuque, Iowa; Diamond Jo Worth in Northwood, Iowa; Evangeline Downs Racetrack & Casino in Opelousas, Louisiana; and Amelia Belle Casino in Amelia, Louisiana.
According to Reuters, the deal for Peninsula Gaming is based on a purchase cost of $745m, while $700m will be used to refinance its existing debt.
Keith Smith, president and CEO of Boyd Gaming, said the deal would significantly boost the company’s financial profile and cash flow. Boyd’s share price increased as much as 12% yesterday following the announcement.
Smith said the newly acquired properties “operate in locations with limited gaming supply and stable tax and regulatory environments, resulting in attractive EBITDA margins”.
“Acquiring Peninsula Gaming is a transformative transaction that fits perfectly into our growth strategy by expanding our Company’s scale, diversifying our platform, strengthening our financial profile, and generating meaningful value for our shareholders,” he added.
“The Peninsula properties are a strong fit for us, as they are well-managed and operate in resilient markets in the Midwest and South. We anticipate this transaction will be immediately accretive to earnings and significantly increase our free cash flow.”
Boyd Gaming already has operations in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey, meaning it could be well-placed to gain online gambling licenses if and when these states regulate, with an amended egaming bill introduced to the Illinois Senate earlier this week and a bill in New Jersey currently under consideration.
The company has been preparing for the regulation of online gambling in the US and entered into a joint venture agreement with bwin.party last October which would see the two “jointly offer” online poker in the US, while it has also applied for an interactive gaming licence in Nevada.
Under the terms of October’s JV agreement Boyd and bwin.party will create a new entity “ 10% owned by Boyd “ which will offer poker under bwin.party’s existing poker brands, as well as signing a separate 15-year deal which will see Boyd create its own poker offering using bwin.party’s technology platform.
According to a company statement, Boyd Gaming has obtained committed financing for the entire transaction to acquire Peninsula Gaming. It will fund the transaction with $200m in cash and approximately $1.2bn in debt at the Peninsula subsidiary. Peninsula Gaming will loan approximately $144m loan as part of the deal. The transaction is expected to close by the end of 2012.