MTR Gaming Group, which owns three racetracks, has entered into a "definitive agreement" by which it will combine with the parent company of Eldorado Resorts, the company said Sept. 9.
A cash election option will be offered at $5.15 per share for up to 5.8 million shares to MTR Gaming's current stockholders, according to a release. MTR Gaming's remaining common shares will be exchanged for shares in the combined new company, which will remain publicly traded under the name Eldorado Resorts Inc.
MTR Gaming owns Mountaineer Casino, Racetrack & Resort in West Virginia, Presque Isle Downs & Casino in Pennsylvania, and Scioto Downs Racino in Ohio. Eldorado Resorts owns casinos in Louisiana and Nevada.
The deal is expected to close in mid-2014. Gary Carano will be named chief executive officer of the new company.
"We are excited to announce this transformative transaction, which creates a new gaming platform with a diversified portfolio across the country," Carano said in the release. "Our strong balance sheet will allow us to take advantage of future growth opportunities as the gaming industry continues to consolidate.
"In addition, we are thrilled to partner with the team at MTR Gaming that has done a tremendous job in developing and operating the MTR portfolio. We believe that the MTR Gaming management team will be a significant part of our success going forward."
The new company will operate six properties across five jurisdictions with 9,968 slot machines and video lottery terminals, 283 table games, and 3,282 hotel rooms, according to the release. Based on the transaction value of $5.15 per share, the company will have a pro forma enterprise value of approximately $1 billion, according to the release, which made no mention of the company's horse racing operations.
"This transaction provides MTR Gaming Group a great opportunity to offer our stockholders a choice to continue to be a part of our future success or to receive a significant cash premium to the current stock price," MTR Gaming president and chief operating officer Joe Billhimer said. "Further, as a more diversified and stronger company, we believe the new Eldorado Resorts will provide greater opportunities with a broader platform for all of MTR Gaming's existing stakeholders, including our team members, vendors, equity and bondholders, and above all, our valued customer."