- Strat operator says it will be choosy when it comes to deal-making
- Could examine opportunities in Nevada and beyond
Golden Entertainment (NASDAQ: GDEN) is open to mergers and acquisitions, but executives said the casino operator will be judicious on that front.
On a conference call with analysts following the release of fourth-quarter results, Golden management said they’re willing to consider acquisitions as avenues for driving shareholder value, but there will be conditions attached to potential deals, including targets possessing specific earnings before interest, taxes, depreciation, and amortization (EBITDA) metrics.
We would not be looking at any green field developments,” said CFO Charles Protell on the call in response to a question from Macquarie analyst Chad Beynon. “And I don’t think we’d be looking at any single asset acquisitions that are sub $40 million to $50 million of EBITDA. I’d say outside of that, we are open to all types of avenues of M&A.”
A “green field development” would be one that Golden would build from scratch. From that, it can be inferred that Golden won’t shop for casinos that have yet to come online or those that need significant tending to. Protell added Golden would want a rapid path to deleveraging if it’s a buyer of another operator to meet its long-term leverage target of 3x or less.
Nevada Likely to Remain Focus for Golden
Golden is based in Las Vegas and the city is home to the bulk of its casinos and gaming taverns, though it has some gaming bars in Reno. It’s also the top casino operator in the Laughlin and Pahrump markets.
Executives noted that Las Vegas remains the operator’s point of emphasis for the time being and while it’s not averse to acquisition opportunities in other states, if such deals were to materialize, the transactions would not be for single properties.
“I think if we’re looking out of state, it would be in the context of multiple properties,” said Protell in response to a question from Jefferies analyst David Katz. “I think we would only look really for single assets within the state (Nevada). We won’t go buy a one-off riverboat in Iowa that’s doing $15 million to $20 million of EBITDA. But things that are part of a larger portfolio, we certainly look at that.”
Golden is almost two years removed from its $260 million sale of the Rocky Gap Casino Resort in Flintstone, Md., which was then the operator’s lone gaming venue outside of its home state. Executives didn’t mention states outside of Nevada in which the company could evaluate acquisitions.
Golden Addresses Real Estate Chatter
Late last year, speculation intensified that Golden, which owns all of the land on which its casinos sit, could monetize some of its real estate holdings as a way of boosting shareholder value. Protell mentioned that in prepared remarks on the call, but didn’t provide a timeline for potential transactions.
The Strat, located near the Las Vegas Strip, is the operator’s most valuable piece of property. Analysts widely expect that if Golden decides to part with that land, it would lease back the casino hotel from the real estate buyer.
One lingering issue that wasn’t addressed on the call was the fate of the Colorado Belle — Golden’s shuttered casino in Laughlin. That venue was closed due to the coronavirus pandemic and has to reopen. Golden runs two other casinos in that market.
The post Golden Entertainment to Be Selective on Acquisitions appeared first on Casino.org.
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