July 8, 2015 - 11:41 am
Nevada gaming regulators on Wednesday tentatively approved the $341 million merger of slot machine route giant Golden Gaming with casino operator Lakes Entertainment, turning the family owned business into a publicly traded company.
Golden Gaming and Lakes announced the merger in January. The Gaming Control Board unanimously signed off on the deal. The Nevada Gaming Commission will rule on transaction on July 23.
The newly named company will be called Golden Entertainment and will be traded on the Nasdaq replacing Lakes’ current listing. 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.
Privately held 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.
Sartini told the Control Board the transaction allows Golden to expand its business model outside Nevada. He said the first target would be Montana, which has some 16,500 slot machines operated in bars and taverns. The merger with Lakes was approved by Montana gaming regulators earlier this year.
“This deal made very good sense and it was not hard to understand the reasons for putting these two companies together,” Sartini said.
In a presentation to the Control Board, Golden Gaming Chief Financial Officer Matt Flandermeyer said the new company would have $145 million of long term debt, with a net leverage “on the lower end of gaming industry averages.”
Sartini said growth would “present itself” in Nevada.
“We might have the opportunity to take the tavern and restaurant locations to other jurisdictions,” he added.
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.
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.
Berman, who attended the Control Board hearing, is a long-time gaming figure, having founded Grand Casinos Inc., the company that preceded Lakes. According to Yahoo Finance, Berman is Lakes’ largest stockholder with almost 3.7 million shares. Berman also founded the World Poker Tour.
Berman was recommended for a limited gaming license to allow gaming agents to complete his investigation.
Control Board Chairman A.G. Burnett told Sartini he was “excited” about the potential of the merger when it was first presented with him inn January.
“My opinion hasn’t changed,” Burnett said.
Sartini said after the hearing that Golden “has come a long way from a couple of taverns.”
The new company will retain ownership of the Rocky Gap Casino Resort 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 a casino with 500 slot machines, a poker room and 10 table games.
Lakes Entertainment shareholders and Maryland gaming regulators signed off on the transaction last month.
Contact reporter Howard Stutz at email@example.com or 702-477-3871. Find him on Twitter: @howardstutz