Boyd Gaming Corporation announced that it has entered into a definitive agreement to acquire Lattner Entertainment Group Illinois, LLC, an Illinois slot machine route operator, for total cash consideration of $100 million. Lattner currently operates nearly 1,000 gaming units in 220 locations across the state.
The acquisition marks the Las Vegas-based operator’s first foray into the distributed gaming business, in which route operators manage games for bars, taverns, convenience stores and other locations.
The purchase price represents an implied multiple of approximately 8 times adjusted EBITDA, including incremental growth opportunities and expected cost synergies. The company anticipates the acquisition will be free cash flow-positive and immediately accretive to earnings.
“The acquisition of Lattner is a strategic opportunity to further diversify and expand our business,” said Keith Smith, president and CEO of Boyd Gaming. “Lattner will provide us a valuable new avenue to access gaming customers, and a platform to participate in the expansion of distributed gaming. We are excited to welcome the Lattner team to Boyd Gaming, and look forward to establishing ourselves as one of the leading distributed gaming operators in the country.”
The transaction is expected to close by the end of the second quarter of 2018, subject to the satisfaction of customary closing conditions and the receipt of all required regulatory approvals. Boyd intends to finance the transaction through cash flow from operations and availability under its existing credit facility.
Morrison & Foerster LLP served as legal advisor to Boyd Gaming for the transaction. Wells Fargo Securities served as exclusive financial advisor and Koley Jessen served as legal advisor to Lattner during the transaction.
The move is a hedge against competition from the Illinois bar-based video lottery market to Boyd’s land-based casinos in the Chicagoland region. Boyd operates the Par-A-Dice Hotel Casino in East Peoria and the Blue Chip Casino Hotel in Michigan City, and is acquiring the Belterra Casino Resort, in Indiana. During a recent earnings call, Smith complained that the new Illinois VLT market is “like three new riverboat casinos in the market.”
