Century Casinos Prowling for More Acquisitions After Digesting Eldorado Purchases

Posted on: January 28, 2020, 03:07h. 

Last updated on: January 28, 2020, 03:40h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Century Casinos, Inc. (NASDAQ:CNTY) added to its lineup of US gaming properties in significant fashion last year, buying three venues from Eldorado Resorts, Inc. (NASDAQ:ERI). And the Colorado-based regional operator probably isn’t done using acquisitions to expand its roster.

Century Casinos is hunting for more bolt-on buys and some could be revealed later this year. (Image: TripAdvisor)

Last June, a week before it revealed its $17.3 billion takeover for Caesars Entertainment (NASDAQ:CZR), Eldorado agreed to sell the Mountaineer Casino Racetrack and Resort in West Virginia, and the Isle Casino Cape Girardeau and Lady Luck Casino – both in Missouri – to Century and Vici Properties (NYSE:VICI) for $385 million.

That transaction closed last month, boosting the number of gaming properties Century runs in the US to five from two. Entering 2019, the company’s lone US venues were namesake properties in Central City and Cripple Creek, Colo. Century also runs casino-resorts in Canada and Europe, but the company could be on the prowl to add to its domestic portfolio.

This is a transformative acquisition for us (the purchases from Eldorado) — it increases the percentage of our operating profit from U.S. operations from 23% to 72% — and to larger and different types of properties — including hotels and racetracks,” said Century co-CEO Peter Hoetzinger in an interview with the Colorado Springs Gazette.

The gaming industry has been awash in asset sales in recent months, ranging from the high end, multi-billion dollar deals by MGM Resorts on the Las Vegas Strip, to smaller transactions, such as Eldorado’s recent $230 million sale of a Louisiana property to Maverick Gaming LLC.

Century Type of Deals

With a market value of about $240 million, Century is one of the smaller publicly traded gaming companies in the US. But at the end of the third quarter, the company had $44 million in cash on hand. That’s an impressive sum for a company of its size.

Analysts believe the operator’s strong balance sheet positions it to consider further purchases, particularly if it does so with partners, as it did with Vici on the Eldorado buys. Of the $385 million that was paid to purchase the two Missouri casinos and the West Virginia venue, Vici doled out $278 million for the real estate assets, while Century paid $107 million for operating rights.

Hoetzinger believes there will be plenty more opportunities to scoop up smaller, attractively-priced properties, because there are willing sellers, including Caesars and Eldorado, and a dearth of buyers boasting Century’s license capabilities and robust finances.

Searching For More

In the Colorado Springs Gazette interview, Hoetzinger said it’ll take the company “a quarter or two” to adequately absorb the three properties purchased from Eldorado. But, he added that Century could again be a buyer in the second half of this year, with the aim of doing deals similar to the aforementioned transaction every 18 months.

Beyond smart deal-making, analysts see the emergence of sports betting in Colorado – slated for a May launch – as a potential catalyst for Century’s stock this year, with one saying sports wagering in that market could boost the company’s revenue by three percent to 10 percent per year.