April 21 (Bloomberg) -- Pinnacle Entertainment Inc. rose the most in five months after activist investor Orange Capital LLC disclosed a 4.5 percent stake and urged the casino owner to spin off its properties into a real estate investment trust.
The shares rose 7.9 percent to $23.83 at 12:20 p.m. in New York after climbing as much as 8.8 percent, the most intraday since Nov. 6.
Orange Capital, the hedge fund co-founded by Daniel Lewis, is in talks with Las Vegas-based Pinnacle’s board and management and is pushing for a transaction that would distribute the proposed REIT to the company’s shareholders in a tax-free transaction, according to a regulatory filing today.
Pinnacle owns and operates 14 casinos in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri and Nevada, as well as racetracks. New York-based Orange Capital, which said it holds 2.64 million shares of Pinnacle, also has targeted companies such as Strategic Hotels & Resorts Inc., a hotel REIT, and PHH Corp., a mortgage and fleet manager.
Penn National Gaming Inc., a Pinnacle competitor, last year spun off most of its real estate into a REIT similar to what was proposed by Orange Capital, creating Gaming & Leisure Properties Inc., the first casino real estate investment trust.
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