A profitable small-market casino operator plans to acquire Dover Downs Gaming and Entertainment after the company gained revenue relief from the State of Delaware.
Dover Downs Gaming & Entertainment, Inc. and Twin River Worldwide Holdings, Inc. announced a merger that will make Rhode Island-based Twin River into a publicly traded company gaming and entertainment holdings throughout the United States.
The merger contemplates that Dover Downs stockholders will exchange their Dover Downs stock for Twin River common shares representing 7.225 percent of the equity in the combined company at closing.
Dover Downs shares soar
Shares of Dover Downs rose by 50 percent in Monday trading to around $3 a share. In recent years, shares have traded below $1 at times, due to grim prospects for the state’s gaming industry that has been hit by competition from Pennsylvania and Maryland.
Twin River is privately held. Twin River will register its shares with the Securities and Exchange Commission and list the shares.
For the fiscal year ended December 31, 2017, Twin River had $428 million in revenue and net income of $63.5 million. Dover Downs posted a $1 million loss, due to the state’s high revenue sharing percentage on casino play. That figure was reduced slightly in recently passed legislation.
Dover Downs’ President and CEO, Denis McGlynn stated, “Becoming part of Twin River is transformational for us. We have been impressed with the depth and talent of the Twin River organization and their operational capabilities. We believe this transaction will help us grow our business, invest in our people and our facilities and compete more effectively given changes in gaming on the horizon. We expect to see many positive benefits for the State, the Delaware Lottery and our employees and stockholders.”
Under the casino bill, Dover Downs or its successor would have to invest in marketing and other areas as a prerequisite to receiving the relief.
Rollins to join board
Jeffrey W. Rollins, a director and member of the Audit Committee of Dover Downs is expected to join the Twin River Board of Directors, pending regulatory approval.
A committee of the Board of Directors of Dover Downs comprised of non-executive, independent directors unanimously determined that the transaction is fair to, and in the best interests of, Dover Downs and its stockholders, a release stated.
The Dover Downs Board of Directors has also unanimously approved the transaction and has recommended that Dover Downs’ stockholders approve the merger.
Twin River Executive Chairman John E. Taylor, Jr. said, “We’re excited about the many benefits we believe we will realize from the combination. Dover Downs and its team are experienced in not only brick and mortar casino operations, but in sports betting, which we think will be helpful as we introduce that amenity at our properties, and in the online gaming sector which continues to evolve nationwide. Equally important, we see real opportunities to grow the Dover Downs business through investment in its people and facilities, similar to what we have achieved with our other assets over the past several years.”
Flagship to open in Rhode Island
Taylor continued, “We’ve been focused on growing the overall business for some time now as a means to create greater shareholder value, expand our geographic footprint to achieve financial economies and strengthen our financial position. This merger should well position us to achieve all three objectives in a context in which existing shareholders of Twin River who desire it could obtain liquidity.”
He concluded, “We’re grateful for the strong partnership we enjoy with the State of Rhode Island at our flagship property, and we look forward to working equally effectively with the State of Delaware in maximizing the potential of Dover Downs.”
The merger would provide a physical presence for Twin River in the Mid-Atlantic region. Twin River already operates assets in the South (Biloxi, Mississippi), West (Aurora, Colorado) and Northeast (Lincoln and Tiverton, Rhode Island (opening shortly).
The consummation of the merger is also subject to regulatory approvals and other customary closing conditions.
Dover Downs was advised by Citizens Capital Markets as financial advisor and Drinker Biddle & Reath LLP as legal counsel. Twin River’s financial advisors were Moelis & Company LLC and Stifel and its counsel was Jones Day.
