Penn National Gaming to Acquire Harrah's St. Louis for $610M in Accretive Transaction
Penn National Gaming (NASDAQ: PENN) announced Monday that it has entered into a definitive agreement to acquire the stock of the Harrah's St. Louis gaming and lodging facility from Caesars Entertainment (NASDAQ: CZR) for total consideration of approximately $610 million. The transaction price represents a multiple of approximately 7.75 times the property's trailing twelve month EBITDA (earnings before interest, taxes and depreciation) and will be funded through an add-on to Penn National's existing Senior Secured Credit Facility. While the acquisition is a stock transaction, for tax purposes, it will be treated as an asset transaction which Penn National expects will provide tax benefits that will effectively reduce the purchase multiple to 6.75 times the property's trailing twelve month EBITDA. Pro forma for the completion of the transaction, Penn National Gaming's total debt to EBITDA leverage ratio will increase to 3.25 times from 2.75 times (at March 31, 2012).
The transaction, expected to close in the second half of 2012, is subject to customary closing conditions and regulatory approvals and upon closing, Penn National will re-brand Harrah's St. Louis with the Company's Hollywood-themed brand.
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