US casino developer Eldorado Resorts has announced the agreement of a deal to sell two of its regional gaming properties to fellow casino developer and racetrack operator Churchill Downs for a total combined fee of $229.5m.
Subject to full regulatory approval, the properties being sold are: Presque Isle Downs & Casino, a racetrack casino property in Erie, Pennsylvania at a cost of $178.9m and the Lady Luck Casino in Vicksburg, Missouri for $50.6m.
However under the terms of the multi-million dollar deal, the purchase of Presque Isle must take place before the sale of the Lady Luck casino can proceed. Eldorado have confirmed that the proceeds of the transactions will be reinvested among its 18 remaining casinos, which are situated in ten states across the US.
In a statement, Eldorado Chairman and CEO Gary Carano said: “The sale price represents an attractive multiple of these properties’ trailing 12 months cash flows.
“Our agreements to divest Presque Isle and Lady Luck Vicksburg are consistent with our strategy to maximize returns from our portfolio of regional gaming assets through investments in new properties as well as opportunistic divestitures.”
The sale is Eldorado’s biggest dip into the market since it agreed a $1.7bn deal to purchase rival firm, Isle of Capri in January 2017, adding 12 resorts (including the Lady Luck Casino) to its property portfolio as part of the transaction.
Carano added: “We remain fully committed to expanding our platform into growth markets that we believe have the potential for high returns as well as deploying capital toward high return investments in our existing properties.”
In a separate statement, Churchill Downs CEO Bill Carstanjen explained why Presque Isle and Lady Luck Vicksburg are appealing investments for the company: Saying: “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.”