Bowing to the demands of the Federal Trade Commission (FTC) to avoid antitrust allegations from that oversight body, Pinnacle Entertainment – a Las Vegas-based major midwestern casino operator with properties and racetracks scattered throughout Louisiana, Indiana, Ohio, Missouri and Texas – will put two of its kingpin casinos up for sale. The move is in reaction to Pinnacle’s impending $2.8 billion purchase of rival Ameristar Casinos, which also operates primarily in the midwest.
FTC Demands Divestment of Casinos
“We are pleased with the progress we have made in addressing the Federal Trade Commission’s administrative complaint and look forward to completing our proposed acquisition of Ameristar as soon as possible in the third quarter [of 2013],” said Pinnacle’s CEO Anthony Sanfilippo in an issued statement on the matter. The company has secured close to $3 billion in financing to finish up the buyout of Ameristar.
Investors on Wall Street are now wondering who will snatch up the “for sale” Pinnacle properties, and at what price. With pressure on to unload both their downtown St. Louis casino and a western Louisiana hotel-casino development, there’s talk that the prices could be discounted or even bargain basement, just to get ‘er done.
“The required sale of both properties could limit the potential sales price of both assets,” said Wells Fargo Securities gaming analyst Cameron McKnight, speaking to investors last week.
Approvals Still Required
The up-for-sale properties, specifically, are Pinnacle’s own resort casino project in St. Louis, which encompasses Lumiere Place Casino, HoteLumiere (sic) and the Four Seasons Hotel; as well as Ameristar’s planned $580 million casino-hotel project, still under development, in Lake Charles, Louisiana. Before the sale of these two projects was determined, the FTC blocked the merger of the two gaming behemoths, saying it would impact competition in their joint Missouri and Louisiana casino markets. Already approved by company stockholders and Nevada gaming regulators – the latter required as both Pinnacle and Ameristar have Nevada-based headquarters – even if everything is smooth sailing from here on out, Missouri and Louisiana’s gaming authorities will need to rubber stamp the deals.