Two State Regulators Approve Penn National Takeover of Pinnacle Entertainment
Posted on: March 22, 2018, 06:00h.
Last updated on: March 22, 2018, 04:47h.
Penn National is one step closer to completing its proposed takeover of Pinnacle Entertainment, as the gaming firm received approval from two state-level regulatory bodies for the transaction.
According to a statement from Penn National on Wednesday, both the Pennsylvania Gaming Control Board and the West Virginia Lottery Commission have signed off on the deal.
However, other regulatory approvals are necessary before the $2.8 billion acquisition can move forward.
“We are grateful for the prompt review by the PGCB and WVLC of the proposed transaction and are very pleased to have cleared the first regulatory hurdles on the path towards completing our proposed acquisition of Pinnacle Entertainment,” Penn National CEO Timothy Wilmott said in a statement. “We look forward to securing additional regulatory approvals in the near term, with our goal remaining to complete the transaction in the second half of 2018.
FTC Considering Monopoly Concerns
Regulatory concerns are the most likely stumbling block for the transaction. Just last week, the US Federal Trade Commission (FTC) made a second request for “additional information and documentary materials” as they continue to consider whether the acquisition will violate antitrust laws.
The concern that combining these two companies could turn Penn National into a regional monopoly. Even after Pinnacle agreed to sell four properties off to Boyd Gaming to ease these worries, the completed transaction would leave Penn National with 41 properties in 20 jurisdictions throughout North America.
There has been talk of a potential merger between the two firms since at least sometime last year. In October, the Wall Street Journal reported that there had been “off-and-on-again” talks about consolidating their gambling properties for some time, though at the time, the sides weren’t able to agree on terms. Penn National finally announced the $2.8 billion transaction last December.
Shareholders to Vote Next Week
Along with regulatory approvals, both companies will also be holding special shareholder meetings next Thursday in order to vote on issues related to the acquisition.
Between those votes and the FTC probe, it may seem like there are several potential stumbling blocks for the transaction, but officials at Penn National believe that they shouldn’t have trouble completing the deal by the end of the year.
The state-level approvals are certainly a good sign that other regulatory boards will rule similarly. The Pennsylvania Gaming Control Board also approved the transfer of Pinnacle Entertainment’s license to Penn National, who will pay a change of control fee of $3.75 million to take possession of the license.
Penn National currently operates 29 gaming facilities in 16 states as well as Ontario, Canada. These include both casinos and racing facilities, with a focus on slot machines.
The company also operates an interactive division that offers free-to-play social online casino sites.
Founded in 1938 as Hollywood Park Entertainment, Pinnacle Entertainment today operates 16 gaming facilities in nine states, though only 12 of those would be acquired by Penn National as a result of this acquisition.
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