Massive Casino Debt Passed Along

Pinnacle to buy Ameristar Casinos
Price tag set around $869M
Dec 21, 2012

In a deal that would more than double its size, Pinnacle Entertainment said Friday that it will buy rival Ameristar Casinos for about $869 million, plus take on $1.9 billion of its debt.

Pinnacle owns seven U.S. casinos and a racetrack and is developing another property. Ameristar has eight casinos in the United States — including one in Vicksburg — and has a $500 million casino under construction in Lake Charles, La. The company said buying Ameristar could help it become a bigger player in the gaming industry, while trimming costs.

U.S. casinos have struggled to recover from the recession as consumers watch spending. Larger U.S. casino companies have increasingly relied on their properties in Asia for profits.

If the deal is approved by shareholders and regulators, Pinnacle will pay $26.50 for each share of Ameristar Casinos Inc. That’s a 20 percent premium over the company’s Thursday closing stock price of $22.07. It’s also gaining $116 million of the company’s cash.

Ameristar shares jumped 17 percent to $25.75 on the news, while Pinnacle shares rose 3 percent to $13.80.

The deal, expected to close by the end of the third quarter, has been approved by the boards of both Las Vegas operators. Pinnacle said it has received a financing commitment.

Pinnacle said the acquisition would save it at least $40 million a year and boost earnings.

Pinnacle has casinos in Louisiana, Missouri and Indiana. It’s developing another property in Ohio and also has a racetrack in the state. Ameristar’s holdings include casinos in Missouri, Iowa, Colorado, Mississippi, Indiana and Nevada. Had the two companies already been combined, it would have generated $2.4 billion in revenue in the 12 months through September, Pinnacle said.

Pinnacle was the parent company of Biloxi Casino Corp., which did business as Casino Magic Biloxi.

That casino closed in fall 2006, and the Biloxi property was sold to Harrah’s Entertainment for $25 million.

http://www.clarionledger.com/viewart/20121222/BIZ/312220017/Pinnacle-buy-Ameristar-Casinos

Acquisition of Ameristar Casinos, Inc. by Pinnacle Entertainment, Inc. May Not Be in Ameristar Casinos Shareholders' Best Interests

SAN DIEGO and LAS VEGAS, Dec. 21, 2012 /PRNewswire/ -- Shareholder rights attorneys at Robbins Umeda LLP are investigating possible breaches of fiduciary duty and other violations of the law by members of the board of directors of Ameristar Casinos, Inc. (NASDAQ: ASCA) in connection with their efforts to sell the company to Pinnacle Entertainment, Inc. (NYSE: PNK).

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On December 21, 2012, Ameristar Casinos and Pinnacle Entertainment announced they had entered into a definitive merger agreement under which Pinnacle Entertainment will acquire Ameristar Casinos through an all cash offer. Ameristar Casinos shareholders will receive $26.50 per share. The transaction is expected to close in the third quarter of 2013.

The Board of Directors' Actions May Prevent Ameristar Casinos Shareholders from Receiving the Maximum Value for Their Stock

Robbins Umeda LLP's investigation focuses on whether the board of directors at Ameristar Casinos is undertaking a fair process to obtain maximum value and adequately compensate its shareholders. The $26.50 per share offer price is substantially below the $31 target price maintained by an analyst at Knight Equity Research, and the $29 price set by an analyst at Imperial Capital. Further, on October 31, 2012, Ameristar Casinos announced that the company's third quarter of 2012 "was one of Ameristar's most profitable ever." Given, these facts, the firm is examining whether the board of directors' decision to sell Ameristar Casinos for $26.50 per share is fair to shareholders and maximizes the value for their shares.

Ameristar Casinos shareholders have the option to file a class action lawsuit against the company to secure the best possible price for shareholders and the disclosure of material information so shareholders can vote on the transaction in an informed manner. If you own Ameristar Casinos stock and are interested in information about your rights and potential remedies, contact Darnell R. Donahue at (800) 350-6003, ddonahue@robbinsumeda.com, or via the shareholder information form on the firm's website.

Robbins Umeda LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested. For more information, please go to http://www.robbinsumeda.com.

Press release link:
http://www.robbinsumeda.com/shareholders-rights-blog/ameristar-casinos-inc/

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http://www.prnewswire.com/news-releases/acquisition-of-ameristar-casinos-inc-by-pinnacle-entertainment-inc-may-not-be-in-ameristar-casinos-shareholders-best-interests-184509441.html