Gaming company and horse racing giant Churchill Downs Incorporated (CDI) has entered a definitive agreement to acquire substantially all of the assets of casino and hospitality business Peninsula Pacific Entertainment (P2E) for total consideration of $2.485 billion, the Kentucky Derby operator announced on Tuesday.
The transaction is set to expand the geographic footprint of CDI’s live and historical racing entertainment venues and significantly increase the scale of the business, according to a press release. The racing and gaming company will acquire all of P2E’s assets in Virginia and New York, including Colonial Downs Racetrack and Rosie’s Gaming Emporium, plus the operations of Hard Rock Sioux City casino property in Iowa.
The transaction, dependent on usual and customary closing conditions, is expected to close “by the end of 2022,” according to Churchill Downs. The deal will have to secure appropriate approvals from gaming commissions in all three states involved. CDI will fund the P2E transaction with a combination of new debt and cash on hand, including pending proceeds from a sale of land near Calder Casino.
“This unique set of assets expands our geographic footprint and provides additional scale,” said Bill Carstanjen, Chief Executive Officer of CDI. “P2E has done an exceptional job developing and managing this collection of assets, which we are very excited to acquire and plan to strategically grow in the years ahead.”
Assets acquired
In Virginia, CDI will acquire the thoroughbred racing facility Colonial Downs Racetrack, located in New Kent, as well as six “Rosie’s Gaming Emporium” historical horse racing facilities across the Old Dominion state in Collinsville, Dumfries, Hampton, New Kent, Richmond and Vinton.
The “Rosie’s Gaming Emporium” facilities have approximately 2,700 historical racing machines (HRMs) combined. Due to the transaction, CDI will “significantly expand” the geographic diversity of its live and historical racing entertainment venues, as well as reinforce its status as “a national leader” in historical horse racing, according to a press release.
In New York, CDI is set to acquire del Lago Resort & Casino in Waterloo, a 96,000 sq. ft. casino. The facility features approximately 1,700 slot machines, 80 table games, a 205-room hotel, nine restaurants and bar areas. It also offers 758 covered parking spaces, a 6,000 sq. ft. sportsbook area, a 2,400-seat entertainment venue, and a 7,200 sq. ft. outdoor event venue.
Interior of del Lago Resort & Casino in Waterloo
Lastly, in Iowa, Churchill Downs will acquire the operations of Hard Rock Hotel & Casino in Sioux City. The 45,000 sq. ft. casino features 639 slot machines, 20 table games, a 54-room hotel, 1,511 parking spaces, two live entertainment venues, a 100-piece music memorabilia collection, and a Hard Rock sportsbook.
Under the terms of the transaction, P2E is expected to reach a definitive agreement to sell the real property associated with the Sioux City casino to a third party, a press release explains. CDI will acquire the operating company and lease the property from that third party.
Following the closing, the Kentucky Derby owner will operate Hard Rock Sioux City and lease the property pursuant to lease terms negotiated prior to the closing. Should P2E be unsuccessful in reaching an agreement with a third party to purchase the property, it will be included in the transaction, bringing total consideration to $2.75 billion.
Other development rights
Under Virginia law, CDI will have the opportunity to develop up to five additional historical racing entertainment venues in the state, with collectively up to about 2,300 additional HRMs.
Moreover, the transaction will allow CDI to also acquire the rights to build a large gaming resort, “the Dumfries Project,” with up to 1,800 HRMs in Northern Virginia. P2E had previously announced plans to invest up to $400 million to build the initial phase of the venue, scheduled to open in 2023.
Rendering for ONE Casino + Resort
Another part of the transaction will see CDI acquiring the rights to develop Rosie’s Gaming Emporium in Emporia, Virginia, a seventh historical racing entertainment venue under P2E’s Colonial Downs license. Located along I-95, near the North Carolina border, the facility will feature 150 HRMs and is also expected to open in 2023.
Additionally, Churchill Downs will acquire the rights to P2E’s ongoing effort in partnership with Urban One to develop ONE Casino + Resort, a $565 million destination casino in Richmond, Virginia. Meanwhile, P2E’s gaming license in Louisiana, and its casino development rights in Cedar Rapids, Iowa, are not included in the transaction.
Original article: https://www.yogonet.com/international/news/2022/02/22/61500-churchill-downs-to-acquire-colonial-downs–rosies–nearly-all-p2e-assets-in–248b-deal
