Pinnacle Entertainment agreed on Friday to buy Ameristar Casinos for $869 million in cash, in a deal that would more than double its size.
Under the terms of the deal, Pinnacle will pay $26.50 a share, a 20 percent premium to Ameristar's closing price on Thursday. Pinnacle will also assume Ameristar's $1.9 billion in debt.
Shares in Ameristar jumped 16 percent in premarket trading, to $25.75.
Through the takeover, Pinnacle will quickly expand both its number of properties and its footprint. Ameristar runs eight casino hotels in 11 states, including Illinois, Kansas and its home state of Nevada.
Pinnacle oversees seven casinos in Lo uisiana, Missouri and Indiana, with a racetrack in Ohio. It also holds a 26 percent stake in an international venture, building what is expected to be the first luxury gaming resort in Vietnam.
“The acquisition of Ameristar is a transformative transaction for Pinnacle that will provide us the scale and diversification to more effectively compete,†Anthony Sanfilippo, Pinnacle's chief executive, said in a statement.
The company, which grew out of the Hollywood Park Turf Club racetrack owned by the movie mogul Jack Warner, has steadily moved into the casino business through a series of transactions.
Pinnacle, which had $158.8 million in cash and equivalents on hand as of Sept. 30, said that it had committed bank financing from JPMorgan Chase and Goldman Sachs. It received advice from Goldman and the law firm Morrison & Foerster.
Ameristar was advised by Lazard, Centerview Partners and the law firm Gibson Dunn & Crutcher.
