Churchill Downs Incorporated has entered into two separate definitive purchase agreements to acquire Presque Isle Downs & Casino in Erie, Pa., and Lady Luck Casino in Vicksburg, Miss., for total aggregate consideration of approximately $229.5 million, to be paid in cash, it was announced Feb. 28.
The transactions are dependent on usual and customary closing conditions, including Churchill securing gaming licenses from the Pennsylvania Gaming Control Board and the Mississippi Gaming Commission as well as a racing license from the Pennsylvania State Horse Racing Commission. The Lady Luck Vicksburg transaction is expected to close in the second quarter of 2018. Closing of the Presque Isle purchase, which is also conditioned on the closing of the Lady Luck Vicksburg transaction, is expected to close in the fourth quarter of 2018.
Presque Isle, which opened its casino in February of 2007, operates approximately 1,600 slots, 32 table games, and a poker room. It began live Thoroughbred racing in September of 2007 and conducts approximately 100 live Thoroughbred race dates each year.
Lady Luck Vicksburg operates approximately 620 slots, nine table games, and includes an 89-room hotel.
Based on the properties' combined operational performance, the transaction price represents an aggregate multiple of approximately 8.2 times the properties' trailing 12-month earnings before interest, taxes, depreciation, and amortization, net of cash acquired. After anticipated synergies of $1.1 million, the aggregate multiple drops to 7.9 times.
The transactions will be funded with cash on hand and through Churchill's existing credit facility. Both acquisitions are asset purchases, which Churchill expects will provide tax benefits that will effectively reduce the transaction price multiple.
"We are excited about welcoming both of these properties to the Churchill family," CDI CEO Bill Carstanjen said. "Presque Isle will give us a foothold in Pennsylvania, which has recently passed legislation authorizing real money online gaming. The Lady Luck Vicksburg is immediately adjacent to our Riverwalk facility and offers us operational efficiencies in a stable region. Both properties fit our investment criteria and will be immediately accretive to our shareholders."
Both properties are now owned by Eldorado Resorts, a publicly traded casino entertainment company headquartered in Reno, Nev.