Penn National Gaming has entered into a definitive agreement to acquire the operations of Margaritaville Resort Casino in Bossier City, Louisiana for circa $115m cash in a transaction that is expected to be immediately accretive to operating results upon closing.

Timothy J. Wilmott, Penn National’s CEO, stated: “We are pleased to partner with VICI Properties Inc to structure this tuck-in acquisition of Bossier City’s newest casino resort, which is consistent with our criteria for transactions that are accretive to free cash flow, strategically diversify our revenue and operating base, and present well-defined paths to the realisation of significant synergies. With a purchase multiple of 5.5x trailing 12 months adjusted earnings before interest, taxes, depreciation, amortization, and management fees which we believe declines to below 5.0x with synergies, Penn National believes this transaction further supports our efforts to enhance shareholder value.”

Simultaneous with the closing of the transaction, Penn National will enter into a triple net lease agreement with VICI Properties Inc for the Margaritaville facility. The lease will have an initial annual rent of approximately $23m and an initial term of 15 years, with four 5-year renewal options. The rent coverage ratio in the first year after closing is expected to be 1.9x and the Tenant’s obligations under the lease will be guaranteed by Penn National.

The proposed transaction will further expand Penn National’s regional gaming platform with a property that is complementary to its pro-forma operating base following the completion of the company’s pending acquisition of Pinnacle Entertainment, Inc Upon closing the Margaritaville transaction and the pending Pinnacle transaction (and taking into account announced divestitures), Penn National’s portfolio of regional gaming facilities will increase to 40 properties in 18 jurisdictions.