US casino operator, Penn National Gaming Inc.(NASDAQ:PENN) is proposing to buy Pinnacle Entertainment Inc.(NYSE:PNK) in a deal valued at US$2.8bn that would create a larger-scale gaming platform in the US.
Under the deal, Pinnacle shareholders will receive US$20.00 in cash and 0.42 shares of Penn National shares for each Pinnacle share they own.
Boyd Gaming to buy some assets
Penn National is set to own 78% of the combined company, while Pinnacle will own the rest on completion of the deal.
Based on Friday's closing prices, the deal values Pinnacle shares at US$32.47 each, a 4.9% premium above Friday's closing price of US$30.95.
The per-share bid gives Pinnacle a market capitalization of US$1.87bn.
As part of the deal, Penn National agreed to sell Pinnacle's gaming operations in Missouri, Indiana and Ohio for US$575mln in cash to Boyd Gaming Corp (NYSE:BYD).
The purchase is expected to close in the second half of 2018.
The deal is expected to generate US$100mln in annual run-rate cost savings and add to Penn National’s free cash flow in the first year.