Golden Entertainment Sells Distributed Gaming Unit for $361.5 Million

Golden Entertainment (NASDAQ: GDEN) proclaimed Monday it’s merchandising its distributed gaming operations in Treasure State and Silver State for $322.5 one thousand thousand inward cash plus estimated cash considerations of $39 gazillion upon closure of the transaction.

Privately held J&J Ventures Gaming is acquiring the businesses from Golden and testament move into into a five-year agreement with the casino operator to “support the gaming operations of Golden’s branded tap house locations inwards Nevada.” Those include PT’s Pubs, which are ubiquitous end-to-end the Las Vegas Valley. It was mentioned hither utmost week that Golden could mull a sales agreement of the distributed gaming building block as an boulevard to leaven cash in to thin debt and reenforcement deal repurchases.

J&J Ventures Gaming testament acquire Golden’s Distributed Gaming Operations in Silver State for $213.5 billion positive an estimated $34 one thousand thousand of purchased cash and Golden’s Distributed Gaming Operations inward MT for $109 one thousand thousand plus an estimated $5 1000000 of purchased cash, theme to customary working chapiter adjustments,” according to a statement.

Net of $3.8 gazillion inwards corporate costs, the cut-rate sale cost represents a multiple of 9x of familiarised 2022 earnings before interest, taxes, depreciation, and amortization (EBITDA) for Golden’s distributed gaming arm. The transaction is scheduled to closely by the end of this year.

Golden Distributed Gaming Sale ‘Simplifies Story’

B. Riley psychoanalyst Saint David Bain, who ab initio floated the thought of Golden divesting the distributed gaming unit to unlock shareholder value, said the sales agreement “simplifies” the story around the inventory and allows the companion to focusing on its Sagebrush State operations.

“We trust valuation should move higher. GDEN’s third-party distributed gaming business concern was typically the least understood and thought of stage business past investors, inwards our view,” wrote Bain inward a promissory note to clients on Monday. “We trust GDEN’s remaining trading operations combine for a strong, high-margin dramatic play on NV growth/catalysts. Essentially, we insure GDEN as at present a sharpened, simplified NV virgin play.”

He reiterated a “buy” rating on the shares with a $70 price target, implying upside of 72.66% from the March 3 close.

With its $260 meg sale of the Rocky Gap Casino Resort inward Flintstone, Md., proclaimed lowest August and slated to shut inwards the s quarter, Golden testament follow capable to further its trading operations inward its place province because Rocky Gap is the lone locus inwards its portfolio located outside of Nevada.

“For Golden, these transactions will reserve us to focalize our direction team and cap on our portfolio of whole owned casinos and taverns inward Nevada and create additional economic value for our shareholders,” said CEO Blake Sartini in a statement detailing the deals with J&J Ventures.

Golden’s Golden Silver State Opportunity

Riley’s Bain notes Golden is unlikely to follow up on acquisition opportunities this year, opting to nidus on its NV gambling casino and pub units. But it could mull regional/non-Las Vegas Strip change purchases inwards 2024.

“More likely, we see increased existing and unexampled getting even of working capital policies. We anticipate to a greater extent strong-growing apportion repurchases through this year and into next, especially if shares remain nigh current levels with a horse barn thriftiness and instauration of dividend insurance and/or a special dividend,” noted the analyst.

He added that Golden is unlikely to turn over an outright sales event of itself at electric current levels. Between the operator’s tangible landed estate holdings non beingness adequately valued past public markets and the leaving of the distributed gaming unit, the companionship is at present “a much simpler, attractive aim for acquirers, in our view.”

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