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Ameristar Casinos (ASCA) To Be Acquired By Pinnacle Entertainment (PNK) For $26.50/Shr

 December 21, 2012 07:35 AM

(By Balachander) Ameristar Casinos Inc. (NASDAQ: ASCA) agreed to be acquired by Pinnacle Entertainment Inc. (NYSE: PNK) for $26.50 per share in cash.

The deal represents a premium of 20 percent to ASCA's previous closing price of $22.07.

"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," Pinnacle said.

Las Vegas, Nevada-based Pinnacle will purchase Ameristar 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.

[Related -Merger Arbitrage Mondays – June 3, 2013]

The combined enterprise would have generated net revenue of $2.4 billion over the trailing 12-month period ended September 30, 2012.

Pinnacle Entertainment expect the deal to add to its earnings per share and free cash flow following the closing. It expect to achieve synergies and efficiencies of scale of at least $40 million annually.

Pinnacle operates seven casinos, located in Louisiana, Missouri, and Indiana, and a racetrack in Ohio. Pinnacle is also redeveloping River Downs in Cincinnati, Ohio into a gaming entertainment facility and owns a 26 percent stake in Asian Coast Development (Canada) Ltd. (ACDL).

The deal is expected to close by the end of the third quarter of 2013.

PNK shares, which ended at $13.35 on Thursday, added 1.12 percent in premarket trading on Friday.

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