Introductory Note.
On October 15, 2018 (the “Closing Date”), Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”) completed its previously announced merger with Penn National Gaming, Inc., a Pennsylvania corporation (“Parent”), pursuant to an Agreement and Plan of Merger, dated as of December 17, 2017 (the “Merger Agreement”), by and among the Company, Parent and Franchise Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). At the effective time of the Merger (as defined herein) on October 15, 2018 (the “Effective Time”), the Merger Sub merged with and into the Company (the “Merger”), with the Company surviving the Merger. As a result of the consummation of the Merger, the Company became a wholly-owned subsidiary of Parent.
At the Effective Time, each share of common stock, par value $0.01 per share, of the Company (the “Company Common Stock”) issued and outstanding immediately prior to the Effective Time (other than shares of Company Common Stock (i) owned or held in treasury by the Company or (ii) owned by Parent, its subsidiaries or Merger Sub) was cancelled and automatically converted into the right to receive (i) $20.00 in cash (the “Cash Consideration”) and (ii) 0.42 shares of common stock, par value $0.01 per share, of Parent (the “Parent Common Stock”) (the “Exchange Ratio,” and together with the Cash Consideration and cash required to be paid in lieu of fractional shares of Parent Common Stock, the “Merger Consideration”).
At the Effective Time, each outstanding and unexercised Company stock option and each other Company long-term incentive award, whether vested or unvested, that was granted before December 17, 2017, became fully vested and was cancelled and converted into the right to receive the Merger Consideration in respect of each share of Company common stock underlying such award (less, in the case of stock options, the applicable exercise price). Performance-based awards granted in 2016 were settled based on actual performance, performance-based awards granted on April 4, 2017 were settled assuming the applicable performance conditions were satisfied, and the remainder of performance-based awards granted in 2017 were settled based on actual performance conditions for 2017 and assuming target performance conditions for 2018 and 2019 were satisfied. Performance conditions with respect to awards granted after December 17, 2018 were deemed satisfied at target as of the Effective Time. A portion of such awards vested as of the Effective Time and was settled for Merger Consideration. Parent assumed the balance of such awards (and the performance-based awards were converted into time-based awards), which will vest subject to continued service with Parent.
The foregoing description of the Merger Agreement and the transactions contemplated thereby is not complete and is subject to and qualified in its entirety by reference to the Merger Agreement, attached as Exhibit 2.1 to the Company’s Form8-K filed on December 20, 2017, and incorporated herein by reference.
| Item 1.01 | Entry Into a Material Definitive Agreement. |
In connection with obtaining requisite regulatory approvals for the consummation of the Merger and as contemplated by the terms of the Merger Agreement, immediately prior to the Effective Time of the Merger and upon the execution of joinders on October 15, 2018, the Company and its applicable subsidiaries became parties to certain of the Third Party Agreements (as described more fully in the Merger Agreement), including (i) the membership interest purchase agreement (the “Boyd Divestiture Agreement”) by and among Boyd Gaming Corporation (“Boyd”), Boyd TCIV, LLC (“Boyd Purchaser”), Parent, the Company and Pinnacle MLS, LLC (“Pinnacle Tenant”), which provides for Boyd Purchaser’s acquisition of the Company’s gaming operations at Ameristar Casino Kansas City and Ameristar Casino St. Charles in Missouri; Belterra Casino Resort in Indiana; and Belterra Park in Ohio (collectively, the “Boyd Divestiture Businesses”) and (ii) the purchase agreement (the “Belterra Park Purchase and Sale Agreement” and together with the Boyd Divestiture Agreement, the “Divestiture Agreements”, and the transactions contemplated thereunder, the “Divestitures”), amended and novated to reflect the assumption of all rights and responsibilities of Gaming and Leisure Properties, Inc. (“GLPI”) by Boyd, by and among Parent, a subsidiary of Boyd, the Company and a subsidiary of the Company, which provides for the acquisition by Boyd’s subsidiary of the real estate associated with the Company’s Belterra Park casino in Cincinnati, Ohio. As of the Closing Date, the Company amended its existing master lease with GLPI to (a) reflect new financial terms and (b) remove the Boyd Divestiture Businesses, which allowed such properties to become subject to the new master lease between Boyd and GLPI that was entered into in connection with the Boyd Divestiture Agreement.
