ican casino operator Penn National Gaming Inc has announced the agreement of a $2.8bn cash plus stock deal to acquire fellow gaming operator Pinnacle Entertainment Inc.

Under the terms of the deal, Pinnacle’s shareholders will receive $20.00 in cash and 0.42 shares of Penn National Gaming common stock for each Pinnacle share. Pinnacle currently owns and operates 16 gaming and entertainment facilities in 11 jurisdictions across the US.

Upon the completion of the deal Penn National Gaming will own approximately 78% of the combined entity, with Pinnacle owning the rest. As a result of the deal, Penn National will operate a combined 41 properties with about 53,500 slots, 1,300 tables and 8,300 hotel rooms.

Penn National has received financing for the transaction, subject to customary conditions, from BofA Merrill Lynch and Goldman Sachs Bank USA. To further finance the transaction Penn National and Gaming Leisure Properties Incorporated will enter into a sale and leaseback of the real estate associated with Belterra Park and Plainridge Park Casino for approximately $315m.

An additional $575m in cash will be raised via the sale of Pinnacle’s gaming operations at Ameristar Kansas City and Ameristar St. Charles in Missouri; Belterra Casino Resort in Indiana; and Belterra Park in Ohio to Boyd Gaming Corporation.

In a statement announcing the deal on the Penn National Gaming website, Timothy J. Wilmott, Chief Executive Officer of Penn National Gaming said: “By combining our highly complementary portfolios and similar operating philosophies, we will be able to leverage the strengths of both our companies and create an unparalleled experience for our regional gaming customers, while generating significant value for our shareholders and business partners.

"The combined company will benefit from enhanced scale, additional growth opportunities and best-in-class operations, creating a more efficient integrated gaming company. We look forward to welcoming Pinnacle’s talented employees to our team and to further enhancing our status as North America’s leading regional gaming operator.”

The $2.8bn deal is expected to generate $100m in annual cost synergies during the first year.

Anthony Sanfilippo, Chairman and Chief Executive Officer of Pinnacle Entertainment, added: “Pinnacle is a terrific company whose success is due to the efforts of our more than 16,000 team members that focus every day on providing great service and memorable experiences for our guests.

“Tim and the Penn National team lead a high-quality organisation that, like Pinnacle, has a long track record of operational excellence and accretive growth. We believe the combination will produce an even stronger gaming entertainment platform that builds on the individual accomplishments of both companies and benefits our collective team members, shareholders and guests.”