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Best of Howard Stutz

Gaming Guru

Howard Stutz

Regulators tentatively OK Pinnacle buyout of rival Ameristar

2 May 2013

LAS VEGAS -- Pinnacle Entertainment, Inc.’s planned $2.8 billion buyout of regional gaming rival Ameristar Casinos, Inc. was tentatively approved by Nevada gaming regulators Wednesday despite federal antitrust authorities still having to completely sign off on the deal.

The Nevada State Gaming Control Board Gaming Commission took roughly 45 minutes to approve the merger in which Pinnacle would emerge more than double in size and controlling 17 gaming properties plus one resort complex currently under construction.

Pinnacle, which has its corporate headquarters in Las Vegas, is acquiring two casinos in the Northern Nevada community of Jackpot near state’s border with Idaho as part of the transaction.

If the Nevada Gaming Commission signs off on the control board’s recommendation on May 16, the deal would have its first regulatory approval of the nine states when the Pinnacle and Ameristar operate.

Pinnacle CEO Anthony Sanfilippo said the company has made preliminary presentations on the transaction to several other states. Last week, Ameristar stockholders approved the buyout, in which they will receive $26.50 per share.

Federal antitrust regulators have tentatively OK’d the merger as a whole, Sanfilippo said, but still have questions concerning two markets, St. Louis and Lake Charles, La.

If the transaction goes through, Pinnacle would own three of the four casinos operating in St. Louis. In Lake Charles, Pinnacle operate L’Auberge du Lac while Ameristar is building an neighboring $500 million resort.

Gaming Control Board Chairman A.G. Burnett said the panel acted upon the Pinnacle-Ameristar deal before the deal had received full antitrust approval because the Nevada casinos in Jackpot were not a concern of federal regulators.

“We agree that the combined synergies of the two companies serves to benefit the market,” Burnett said.

The combined company would have more than 15,000 employees nationwide.

“We are much stronger together than separate,” Sanfilippo said. “We’ll double our footprint and we will be operating in states we’re not operating in today.”

The Pinnacle-Ameristar deal was announced in December. The companies hope to complete the transaction by the end of the summer.

Pinnacle currently owns seven casinos in Louisiana, Missouri, and Indiana. It also has a racetrack in Ohio, which is being redeveloped to include a casino with 1,600 video lottery terminals. Pinnacle also has a majority stake in a racetrack outside of San Antonio.

Also Wednesday, Pinnacle also announced a first quarter net loss of $85.4 million, or $1.46 per share. The loss was due in large part to a noncash impairment charge of $92.2 million related to the company’s ownership stake in Asian Coast Development Ltd., which is building a hotel-casino complex in Vietnam.

Without the impairment charge, Pinnacle would have earned 25 cents per share in the quarter, which ended March 31.

In the fourth quarter, Pinnacle wrote down $25 million toward the development. Six weeks ago, MGM Resorts International withdrew as operator of the Vietnam development, leaving the project without a management component.

Sanfilippo said Pinnacle is focused on completing the Ameristar transaction and is not getting involved in the management of the Vietnam development.

During the first quarter, Pinnacle’s overall revenues grew 6.7 percent to $312.6 million.