On Friday, Pinnacle Entertainment announced it has agreed to purchase Ameristar Casinos for $26.50 per share in cash. Including debt of $1.9 billion taken on, and minus cash on hand of $116 million, this works out to an enterprise value of $2.8 billion. Both companies' boards have endorsed the deal.

Pinnacle noted in a statement that the merger will more than double its size to 17 operating properties located in 13 distinct geographies, "adding eight casino-resorts in some of the nation's best gaming markets, including: St. Charles near St. Louis, MO; Kansas City, MO; Council Bluffs, IA; Black Hawk, CO; Vicksburg, MS; East Chicago, IN; and Jackpot, NV."

Combined, the two operations will boast annual net revenues of $2.4 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $649 million, and potentially more, if Pinnacle succeeds in creating anticipated cost synergies of $40 million. The parties expect to close the deal by the third quarter of 2013.

As of this writing shares of Pinnacle are up 18.9% at $15.87 per share. Ameristar is doing even better, up 19.5% at $26.37


The article Pinnacle to Acquire Ameristar Casinos for $869 Million originally appeared on Fool.com.

Fool contributor Rich Smith has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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