| 2017-06-12 07:09:15|
GDEN, GS 07:09 06/12 06/12/17
Golden Entertainment to acquire American Casino & Entertainment properties
Golden Entertainment (GDEN) announced that it has entered into a definitive agreement to acquire American Casino & Entertainment Properties, which owns three properties in Las Vegas including the Stratosphere Casino, Hotel & Tower, Arizona Charlie's Decatur and Arizona Charlie's Boulder, as well as its fourth property, the Aquarius Casino Resort in Laughlin. American is expected to generate approximately $413M of net revenues and $103M of EBITDA in 2017, and Golden expects to achieve approximately $18M of annual run-rate synergies post-closing. The purchase price of $850M includes working capital cash estimated to be approximately $28M at closing. The purchase consideration will consist of $781M cash plus approximately four million shares of Golden stock issued to American's current owner, Whitehall Street Real Estate Partners 2007, a real estate private equity fund managed by the Merchant Banking Division of Goldman Sachs (GS). The number of shares issued to Whitehall was determined based on Golden's 10-day volume weighted average price of $17.05 as of June 9. Upon closing, Whitehall will own approximately 15% of Golden's diluted shares outstanding. The transaction is expected to be immediately accretive to Golden's operating results, increasing free cash flow and earnings per share significantly. Based on American's estimated 2017 EBITDA, the acquisition represents an 8.0x pre-synergies multiple and a 6.8x post-synergies multiple. Pro forma for the completion of the transaction, the combined company would generate approximately $847 million of net revenues in 2017 and approximately $180M of EBITDA in 2017, including $18M of estimated run-rate synergies. The transaction is not subject to a financing condition. Golden has received committed financing totaling $1.1B from JPMorgan Chase Bank, Credit Suisse, Macquarie Capital and Morgan Stanley to fund the cash consideration as well as to refinance Golden's existing credit facilities. The financing commitment includes a $100M revolving credit facility to support Golden's future organic and strategic growth initiatives. The transaction is subject to customary regulatory approvals and is expected to close by the end of 2017.