Churchill Downs is buying Presque Isle Downs & Casino in Erie, Pennsylvania, and Lady Luck Casino in Vicksburg, Mississippi for total aggregate consideration of approximately $229.5m.
The transactions are dependent on the company 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 opened its casino in February 2007 and operates approximately 1,600 slots, 32 table games and a poker room. It began live thoroughbred racing in September 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 twelve month EBITDA (earnings before interest, taxes, depreciation and amortization), net of cash acquired. After anticipated synergies of $1.1m, the aggregate multiple drops to 7.9 times.
The transactions will be funded with cash on hand and through the Company’s existing credit facility. Both acquisitions are asset purchases, which the Company expects will provide tax benefits that will effectively reduce the transaction price multiple.
CDI Chief Executive Officer Bill Carstanjen explained why Presque Isle and Lady Luck Vicksburg are appealing investments for the Company.
“We are excited about welcoming both of these properties to the Churchill family. 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 owned by Eldorado Resorts, a publicly traded casino entertainment company headquartered in Reno, Nevada.