Pinnacle Said to Be in FTC Settlement Talks on Ameristar
Pinnacle Entertainment Inc. (PNK) is in talks with the U.S. Federal Trade Commission to settle the agency’s complaint seeking to block its purchase of Ameristar Casinos Inc. (ASCA), two people familiar with the matter said.
The FTC moved to stop Pinnacle’s proposed $2.8 billion acquisition on May 29, saying the deal would hurt competition and lead to lower payouts for gamblers, especially in Missouri and Louisiana, according to the administrative complaint filed by the agency.
The FTC said that in St. Louis, Pinnacle’s acquisition of Ameristar would cut the number of casino service providers to three from four. In Lake Charles, Louisiana, an Ameristar casino going up adjacent to an existing Pinnacle one will be Pinnacle’s “closest and most significant” competitor in the market, the agency said.
Pinnacle and Ameristar, Las Vegas-based companies that run casinos throughout the U.S., have already provided for the divestiture of as many as two operational properties in their proposed merger agreement, which was announced in December.
Julie Collins, a spokeswoman for Pinnacle, and Peter Kaplan, a spokesman for the FTC, declined to comment on whether negotiations were taking place. The people familiar with the talks asked not to be named because the discussions are confidential.
The fact that the FTC and Pinnacle haven’t already reached a settlement “suggests to us the contested issues are not clear-cut and are more contentious or novel than previous gaming mergers,” Cameron McKnight, a New York-based analyst with Wells Fargo & Co., said in a May 30 note with associates Barry Jonas and Rich Cummings.
“The real sign of productive settlement talks is if the parties withdraw or stay the litigation,” said Billy Vigdor, an antitrust lawyer with Vinson & Elkins LLP in Washington, who served at the FTC for six years.
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