State gaming regulators approve Golden Gaming-Lakes merger
State gaming regulators said Thursday they wished all mergers were this easy.
Golden Gaming's $341 million combination with Minnesota-based Lakes Entertainment was approved Thursday by the Nevada Gaming Commission. The transaction, which was announced in January, is expected to be finalized by Aug. 1, turning family-owned Golden Gaming into Golden Entertainment, a publicly traded company on the Nasdaq.
Golden Gaming CEO Blake Sartini will be CEO and chairman of the new company, which will be headquartered at Golden's current Las Vegas office.
"What you have put together is a template on how this should be done," said Commissioner Randolph Townsend. "There are good synergies between these two companies."
Sartini said the merger allows Golden to expand its business outside of Nevada.
Golden Gaming, which was established in 2001 by the Sartini family, is Nevada’s largest slot machine route operator with more than 7,600 games in 600 statewide locations. The company’s tavern division has 48 locations under five brands. Golden Gaming also owns three casinos in Pahrump. The company has 2,100 employees in Nevada. Family-owned Sartini Gaming is also licensed to operate a slot machine route in Montana.
Lakes Entertainment owns the Rocky Gap Casino Resort in near Cumberland, Md., which is inside the Rocky Gap State Park. The 200-room hotel includes the only Jack Nicklaus Signature golf course in Maryland and is a three-hour drive from 10 million people.
"We're now a company with opportunities in three markets," Sartini said. "This combination allows us to explore new opportunities that we couldn't in the past."
Sartini told the Gaming Commission that three Lakes employees will move from the company's offices in Minneapolis to Las Vegas. The Lakes building in Minnesota was sold. Meanwhile, the managers of Golden's, tavern, slot machine route and casino operations, including Rocky Gap, would report to Golden COO Steve Arcana.
Under terms of the merger, Lakes was valued at $9.57 per share, which represented a 37 percent premium to its closing price in late January. Sartini will be issued more than 7.8 million shares of stock in the new company, a 35 percent ownership stake. Current Lakes shareholders would retain the remaining 65 percent of the company.
Lakes and Golden Gaming estimate the combined company would have 2015 revenue of $348.1 million and adjusted cash flow of $42.5 million. The new company will have $145 million of long-term debt.
Lakes Entertainment Chairman and CEO Lyle Berman will join the board of the new corporation and sign a three-year consulting agreement. Lakes President and CFO Tim Cope will be a board member and consultant to the new company. According to Yahoo Finance, Berman is Lakes' largest stockholder with almost 3.7 million shares.
Sartini said he had hoped to name the company's three new board members Thursday, but their nominations needed to be approved by Lakes compliance committee. He said the new Golden board members "were familiar names to Nevada."
Gaming Commission Chairman Tony Alamo Jr. said he was happy the company's "home base" remained in the Nevada.
"I believe both companies are in a better situation with this deal," Alamo said.
In a separate matter, the Gaming Commission also approved Railroad Pass owner Joseph DeSimone Jr. to operate the historic 84-year-old Henderson casino he purchased in April from MGM Resorts International.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find @howardstutz on Twitter.
