In a recent move, New York listed MGM Resorts International and MGM Growth Properties LLC acquired Borgata Hotel Casino & Spa in Atlantic City for a whopping consideration in the amount of $900 million to current 50% owner Boyd Gaming Corp. After making all the payments it is estimated that Boyd Gaming will gain $600 million through this deal.
MGM Resorts in a filing to New York Stock Exchange stated that they will pay approximately $600 million for Boyd Gaming’s 50 percent interest after reconsideration of Borgata’s outstanding debt of approx $600 million which MGM Resorts will assume and refinance. As per the financial results of Borgata for 12 months ended on 31st March 2016 it reported $812 in net revenues and $212 million in Adjusted EBITDA.
As per the agreement following the acquisition, MGM Growth Properties (MGP) will acquire Borgata’s real property from MGM Resorts and then it will lease back the real property to a subsidiary of MGM Resorts after which this subsidiary of MGM Resorts will operate Borgata.
CEO of MGM Growth Properties stated “We are excited to add Borgata to the MGP portfolio, further diversifying our geographic presence. With this transaction, we are executing on our core growth strategy in prudently building a portfolio of high-quality assets with market leading competitive positions,”
“While we are pleased with the performance of [Borgata], this transaction is an attractive opportunity to immediately unlock significant value for our shareholders,” said Boyd Gaming CEO Keith Smith.
Boyd Gaming has been very active in purchasing properties in 2016 though Borgata may come of their books soon. Boyd Gaming announced the acquisition of Aliante Casino Hotel & Spa in North Las Vegas post which they purchased the Las Vegas assets of Cannery Casino Resorts LLC at a price of $230 million. However, this deal is prominent for MGM for many reasons as it will allow MGM Resorts International to become the largest operator based on the Las Vegas trip to entirely own and control the best-performing casino in Atlantic City.
This deal also allows MGM to expand its portfolio in online gambling as Borgata Hotel Casino & Spa already possess a license to conduct Internet gaming operations in New Jersey. This will allow MGM to shift its focus on developing Internet gambling beyond poker as the market is shifting with more states like Pennsylvania legalizing online gambling in coming future.
