* Offer price represents a premium of 20 pct
* Deal value $2.8 billion including debt
* Pinnacle shares rise to highest in more than three years
By Aditi Shrivastava
Dec 21 Casino operator Pinnacle Entertainment
Inc will acquire Ameristar Casinos Inc for
about $869 million to expand mainly in the U.S. Midwest and
South, sending Pinnacle's shares to their highest in more than
Pinnacle said it would pay $26.50 per share in cash,
representing a premium of 20 percent over Ameristar Casinos'
closing price on Thursday. ()
Ameristar shares briefly traded above the offer price before
easing back to $26.16 in morning trade on the Nasdaq on Friday.
Shares of Pinnacle, which will acquire eight casino-resorts
in the deal, rose as much as 16.6 percent to $15.57 on the New
York Stock Exchange.
Sterne, Agee & Leach analyst David Bain said another suitor
"The amount that Pinnacle is paying is not overpriced by any
means. There are others that may be interested in Ameristar...,"
he said, suggesting Penn National Gaming Inc and MGM
Resorts International as possible rival suitors.
The total deal value is $2.8 billion, including debt of $1.9
billion and cash on hand of $116 million.
Pinnacle and Ameristar had combined revenue of $2.35 billion
in 2011, just below Penn National with $2.74 billion. Las Vegas
Sands Corp, the biggest U.S. casino operator, had
revenue of $9.41 billion.
Pinnacle's biggest acquisition to date was in 2006 when it
acquired the Sands Casino in Atlantic City for $250 million.
Pinnacle said earlier this year it would also buy Federated
Sports + Gaming Inc and Retama Partners Ltd. Those smaller deals
have not yet closed.
"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.
Ameristar casinos are located in St. Louis, Missouri; Kansas
City, Missouri; Council Bluffs, Iowa; Black Hawk, Colorado;
Vicksburg, Mississippi; East Chicago, Indiana; and Jackpot,
Nevada. Pinnacle owns and operates seven casinos, located in
Louisiana, Missouri and Indiana, and a racetrack in Ohio.
Ameristar reported a 2 percent decline in revenue in the
third quarter, missing Wall Street forecasts as it faced
The company's largest shareholder is hedge fund Addison
Clark Management LLC, with a 9.6 percent stake as of Sept. 30.
The deal comes a little more than a month after Pinnacle
said it could lose its investment of more than $100 million in a
casino project in Vietnam as a result of problems with gaming
licenses and funding by local banks.
Goldman Sachs & Co advised Pinnacle, while Ameristar was
advised by Lazard and Centerview Partners LLC.
Pinnacle shares were trading at $15.35 in late morning
trading on the New York Stock Exchange.