Century Casinos on Monday announced it has agreed to buy three casinos in Missouri and West Virginia, more than doubling the size of the Colorado Springs gaming operator.
Century will pay $385 million to Reno, Nev.-based Eldorado Resorts for the Isle Casino Cape Girardeau and the Lake Luck Caruthersville, in Missouri, and the Mountaineer Casino, Racetrack and Resort in West Virginia in a transaction scheduled to be completed early next year, pending approvals from Missouri and West Virginia officials. As part of the deal, Century will sell the real estate for the three casinos to VICI Properties Inc., a New York real estate investment trust specializing in gaming real estate, for $278 million and lease them back.
The acquisition will more than double Century’s annual revenue to nearly $400 million and its operating profits to $50 million, the company told investors and analysts Monday in a conference call.
Century plans to sell its casino venture in Vietnam and end contracts to operate casinos aboard six cruise ships, leaving the company with 10 casinos in North America (including one in Cripple Creek), another in England and a majority interest in seven gaming operations in Poland.
The North American casinos will generate nearly all of its revenue and profits.
“The acquisition of the operations of Cape Girardeau, Caruthersville and Mountaineer will transform Century Casinos into a premier regional casino operator in North America,” Century Co-CEO Peter Hoetzinger said Monday in a news release. “We believe these assets are a great fit for our portfolio and will complement Century Casinos’ expertise in operating small to mid-sized casinos.”
Century said it would finance the deal with a $180 million loan package from Macquarie Capital, but the company said it expects to pay down debt quickly from cash flow from its current and newly acquired casinos as well as growth from its new Century Mile Racetrack and Casino in Edmonton, Canada. The company said it expects the three casinos to immediately add to its earnings and it expects to realize savings from operating “synergies” and “rationalizing” its marketing efforts.
Hoetzinger said on the conference call that Century sees “a lot of similar opportunities out there. You can expect us to keep our foot on the gas pedal and not slow down. As long as we find attractive opportunities at attractive price levels, we will continue to move forward.”
Peggy Stapleton, Century’s vice president of finance, said the company could add two or three employees to its 29-person headquarters staff as a result of the acquisition.
Century stock surged in heavy trading on Nasdaq after the deal was announced, adding $1.07 to $10.08, its highest closing price in more than 12 years and up 11.9% since Friday.
Stock analysts Steven Wieczynski and Brad Boyer of Stifel called the deal “a win for both companies,” while Mike Malouf and Eric Des Lauriers of Craig-Hallum Capital Group said they “expect continued acquisitions of regional casinos in the United States with strong, stable cash flow generation where (Century) can drive growth through operational improvements.”
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