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Gateway Casinos to Merger with Leisure in a C$1.5 Billion Deal

Publish: 08.01.2020
One of the leading brick and mortars casino operators in Canada, Gateway Casinos & Entertainment Limited, has announced it will merge Leisure Acquisition Group, a New York-based special purpose acquisition company in an important new deal worth C$1.5 billion!

Under the provisions of the new agreement, Gateway will offer its shares on the New York Stock Exchange, without going through an initial public offering process first.

Once the deal is successfully completed, Gateway will merge will Leisure, and the new business entity will be a subsidiary of GTWY Holdings Ltd, the Canadian gambling giant’s existing holding company.

An Important Move for the Entire Market

The merger, which is sure to impact the entire North American casino sector, was announced last month. It was also revealed that the transaction would be supported by HG Vora Capital Management LLC hedge fund via an equity commitment worth $30 million. The renowned New York hedge fund has been collaborating with Gateway for some time now, committing more than $100 million so far.

At this moment, Gateway operates a total of 25 casino venues located in Ontario and British Columbia, offering its customers over 12,800 video slot machines, 365 table games, as well as 72 food and beverage outlets. In addition to this, Gateway also operates two facilities in Edmonton, Alberta.

Gateway Casinos to Merger with Leisure in a C$1.5 Billion Deal

According to available information, the move has already been given the green light by both companies’ Board of Directors. If all goes as planned, the deal will be completed during the second quarter of the next year. As usual, the deal will need to be approved not only by Leisure shareholders but also by regulators and Crown agencies as well.

New Growth Opportunities

Marc J. Falcone, Director at Leisure will become the Chief Executive Officer of the new entity once the deal is sealed. Gateway’s current CEO, Tony Santo, will retire from his positions once the merger is completed.

Commenting on his new role, Falcone stated he was looking forward to becoming Gateway’s new CEO and pointed out the possibilities offered by the casino market in Canada. He explained that growth opportunities in this market would allow the company to create notable shareholder value.

The first estimates say the transaction will help Gateway record around C$865.1 million in revenue during 2020, as well as C$925.2 million in 2020. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should amount to C$195 million and C$215 million in 2020 and 2021 respectively.

It is also expected the move will boost Gateway’s expansion plans in the next couple of years. This strategy includes the opening of three new venues in Ontario, as well as the relocation of its other facilities in Ontario and British Columbia – which is four in total.

Apart from all of this, the operator’s current growth strategy also takes into account the expansion of the current gaming offer. Nearly 2,000 new slot machines should be made available to Gateway’s customers, in addition to around 100 new table games and 15 branded outlets.

At the beginning of October, Gateway announced the opening of the new Pulse Arena at its Grand Villa Casino in Burnaby, launched in collaboration with BCLC.