Everbay Capital challenges Golden Entertainment transaction terms
Everbay Capital has issued a follow-up letter to the Board of Directors at Golden Entertainment, outlining concerns about the company’s recently announced sale transactions.
Investment firm Everbay Capital has issued a follow-up letter to Golden Entertainment’s Board of Directors expressing significant concerns about the company’s recently announced sale transactions, calling the pricing “woefully inadequate” and questioning the timing and structure of the deals.
Golden Entertainment announced last week that it would sell its casino real estate portfolio to Vici Properties for $1.16bn while simultaneously selling its casino operations and tavern business (RemainCo) to Chairman and CEO Blake L. Sartini in a transaction valuing the company at approximately $30 per share. The combined deals would take Golden Entertainment private.
Everbay, which has held Golden Entertainment shares since 2021, argues that the RemainCo sale price of $2.75 per share values the operations at just 1.1x EBITDA – substantially below comparable gaming industry transactions.
The firm points to MGM’s recent sale of MGM Northfield Park operations at 6.6x EBITDA as evidence that RemainCo is significantly undervalued. At a similar multiple, Everbay calculates RemainCo would be worth $15.80 per Golden share.
The investment firm characterizes the transaction as opportunistically timed, noting it was announced two days after Golden’s stock hit a four-year low.
Everbay contends that shareholders would receive better value if the real estate were sold separately without the RemainCo transaction, estimating shares could trade around $39 versus the $30 deal price.
Everbay has requested multiple disclosures from the Board, including valuation analysis justifying the 1.1x EBITDA multiple, details on whether other prospective RemainCo buyers were contacted and clarification on whether the company’s 62 acres of excess land are included in the Vici or Sartini transactions.
The firm also calls for extending the one-month go-shop period to three months and allowing shareholders to vote separately on the real estate and RemainCo transactions.
The letter follows Golden Entertainment’s 6 November announcement of a dual transaction structure with Vici and Sartini, which would see the operator privatize its casino and tavern operations while retaining long-term leases on seven Nevada properties. The company said at the time that the deal represented a natural evolution for its business strategy.
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