Churchill Downs to gain ‘substantially all’ Peninsula Pacific assets for $2.48bn

Churchill Downs

Churchill Downs has detailed a definitive purchase agreement, which is expected to close by the end of the year, that will see the group “acquire substantially all of the assets” of Peninsula Pacific Entertainment for $2.48bn.

The agreement, comprising interests within Virginia and New York, as well as the operations of Iowa’s Sioux City casino property, is dependent on usual and customary closing conditions.

This includes the company obtaining approvals from the Virginia Racing Commission, New York State Gaming Commission, and Iowa Racing and Gaming Commission.

The transaction represents a multiple of less than 9x adjusted EBITDA, and includes the incremental value from the recent opening and expansion of certain Virginia facilities, as well as what the group expects to realise from the acquisition of the development rights related to historical horse racing in Virginia.

“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.”

The purchase, which includes the del Lago Resort & Casino in Waterloo, New York, will also see CDI acquire Colonial Downs Racetrack, a thoroughbred racing facility in New Kent, Virginia, as well as six Rosie’s Gaming Emporium historical horse racing facilities across the region. These locations currently include Collinsville, Hampton, New Kent, Richmond, Vinton, and Dumfries.

The company will also gain the rights to build the Dumfries Project gaming resort, with up to 1,800 HRMs in Northern Virginia. P2E previously announced plans to invest up to $400m to build the initial phase of the development, which is scheduled to open in 2023.

Furthermore, Churchill Downs will be able to add a seventh HHR venue under P2E’s Colonial Downs license, via the potential development of a Rosie’s Gaming Emporium in Emporia.

Moreover, under the terms of the transaction, P2E is expected to reach a definitive agreement to sell the real property associated with Hard Rock Sioux City to a third party. This would see CDI acquire the operating company and lease the facility.

In the event that P2E is unsuccessful in reaching a definitive agreement regarding the sale by a specified date, it will be included in the larger agreement and the total consideration will increase to $2.75bn.

Other development rights included relate to P2E’s revived development efforts with Urban One to develop One Casino + Resort, a $565m destination casino in Richmond, Virginia.

The company’s gaming license in the state of Louisiana, and its casino development rights in Cedar Rapids, Iowa, are not included.