GLPI Sweetens Offer for Pinnacle's Casinos

WYOMISSING, PA—Gaming and Leisure Properties Inc. on Tuesday said it was sweetening the pot for Pinnacle Entertainment's board of directors, offering to buy the real estate assets of PNK and spin off its operating business in an OpCo/PropCo arrangement. The revised proposal, which follows a previous unsolicited bid GLPI made on March 9, calls for PNK shareholders to receive a fixed exchange ratio of 0.85 GLPI common shares per PNK share for PropCo, a 54% increase over the exchange ratio GLPI announced in March. It would entail PNK's shareholders owning 100% of OpCo, while also holding a 28% equity stake in an enlarged GLPI.

The two companies entered what Las Vegas-based PNK calls “productive discussions” in May. However, in a letter to PNK's board made public on Tuesday, GLPI chairman and CEO Peter Carlino expressed disappointment that the talks failed to yield a deal, despite what Carlino termed PNK's “continually shifting demands regarding transaction terms and value.”

A combination of PNK's real estate assets with GLPI's would create a PropCo with an enterprise value of $5 billion, GLPI says. It would be the nation's third-largest triple-net lease REIT by enterprise value, says GLPI, “with the scale, diversity and financial strength to deliver increased value to both companies' shareholders.” GLPI was itself spun off from Penn National Gaming in an OpCo/PropCo split two years ago.

Under the revised GLPI proposal, PNK's OpCo would continue to own and operate certain other assets, including Belterra Park Gaming & Entertainment in Cincinnati; the Heartland Poker Tour; and PNK's interest in the Retama Park racetrack in Selma, TX, near San Antonio. It would also retain gaming licenses and gaming equipment as well as approximately 450 acres of developable land adjacent to real estate that GLPI would acquire.

PNK says its board has received GLPI's revised offer. With a view toward creating shareholder value, PNK's board and management team have engaged in “ongoing negotiations with GLPI in order to provide appropriate value” to the company's shareholders, while at the same time working through a REIT separation plan that was originally announced this past November, according to a statement. “Pinnacle's board will review GLPI's revised proposal and respond promptly.”