Gaming And Leisure Offers To Buy Real Estate Assets Of Pinnacle In $4.1 Bln Deal

(RTTNews) - Gaming and Leisure Properties, Inc. (GLPI) offered Monday to acquire the real estate assets of Pinnacle Entertainment, Inc. (PNK) for GLPI shares in a deal having an enterprise value of $4.1 billion, including assumption of debt. GLPI noted that the offer is unanimously approved by its Board of Directors, and fully endorsed by its senior management team.

Following the announcement, PNK is currently trading at $32.68, up $5.26 or 19.18% on a volume of 1.40 million shares, and GLPI is currently trading at $35.62, up $3.25 or 10.04% on a volume of 0.37 million shares.

GLPI noted that pinnacle has refused to engage with it and is denying pinnacle shareholders the substantial benefits of GLPI's proposed transaction.

GLPI said it made repeated efforts since December to engage with Pinnacle in a confidential and productive dialogue on a deal and had submitted its first written proposal on January 16. The company has since raised its offer last week, but still Pinnacle continues to refuse to engage with it.

"Our proposed transaction would create both immediate and longer-term value for the shareholders of both companies and enable Pinnacle shareholders to continue realizing the value of its gaming business without suffering the dilution, delay, and uncertainty associated with its current separation plan," GLPI Chairman and CEO Peter Carlino said in a statement.

GLPI added that the current proposal is immediately accretive to GLPI's adjusted funds from operations per share.

The proposed deal will boost Pinnacle's plan to spin-off its real estate assets into a separate publicly traded company. Pinnacle's board had approved a plan in November 2014 to pursue a separation of its operating assets and its real estate assets into two publicly traded companies.

The proposed deal will see Pinnacle's real estate assets merging into GLPI after they are spun-off into a separate company.

Pinnacle shareholders would receive one share of common stock of the separated entity and 0.5517 shares of GLPI common stock for each share of Pinnacle they own.

The proposed combined entity would be the third largest Triple-Net REIT by enterprise value, with extensive scale, tenancy diversification and financial strength to deliver increased value to shareholders both companies.

Following the closure of the proposed deal, Pinnacle shareholders would own 100 percent of separated entity and about 36 million shares in GLPI, representing an about 20 percent equity interest in the larger, post-transaction GLPI.

The deal is expected to provide Pinnacle shareholders with aggregate value of about $36 per share and to close prior to the end of 2015.

This value represents a 31.3 percent premium to Pinnacle's closing stock price of $27.42 on Friday, and a 60 percent premium to Pinnacle's closing stock price of $22.50 on January 16, when GLPI made its initial offer to Pinnacle.

"We have repeatedly tried to engage Pinnacle in a constructive manner regarding our value-creating proposal, and we are disappointed that they have refused to explore our proposal in any meaningful way. We delivered our first written acquisition proposal to the Board on January 16," Carlino added.

Following the spin-off of the real-estate assets, Pinnacle's operating business would become a separately traded public company and would continue to be operated by its current management and Board of Directors.