Pennsylvania-based casino operator Penn National Gaming announced earlier today that it is to purchase Tropicana Las Vegas Casino Hotel Resort as part of its strategy to introduce its operations in Las Vegas. The company is to pay the amount of $360 million to the current owners of the property.
At present, Onex Corporation and Alex Yemenidjian hold a majority stake in the resort. Tropicana, which is located on the Las Vegas Strip, offers to its visitors more than 1,500 guest rooms, a large casino floor, sportsbook options, various restaurants, a performance theater, etc. Over the past several years, owners spent more than $200 million to upgrade the property.
Timothy Wilmott, Chief Executive Officer of Penn National, said that his company has been interested in introducing its operations on the Las Vegas Strip for quite some time and the acquisition of Tropicana would help it achieve its goal.
Mr. Wilmott further commented that the property would definitely continue to benefit from its location on one of the most popular intersections in the city. Furthermore, the launch of the MGM – AEG Arena is also expected to have a positive effect on the resort’s operations. The 20,000-seat venue is to be launched in 2016.
The executive also pointed out that the purchase of Tropicana would not only enhance Penn National’s “strong competitive position”, but will also create value for its shareholders.
The casino operator is to follow a two-phase plan in order to realize the full value of its acquisition. In the first place, Penn National is to invest about $20 million in the improvement of the property as well as in certain integration activities. Those are to include the adoption of the operator’s nationwide database as well as the integration of the resort’s system into the existing systems of Penn National.
In the second place, the Pennsylvania-based company is to consider future facility enhancements at the resort, such as the addition of new dining options, retail space, improvements at the casino floor, etc.
Mr. Wilmott said in conclusion that Tropicana would certainly offer “a meaningful opportunity” for Penn National, its customers, and shareholders.
The transaction needs to receive regulatory approvals and certain other matters need to be solved before it is closed. The deal is expected to be completed by the end of 2015.
