Great Canadian Gaming Corp. has agreed to be acquired by Apollo Global Management Inc. in a deal valued at more than C$3.3 billion ($2.5 billion), the latest shift for the casino industry that’s been hit by the Covid-19 pandemic.
Apollo will pay C$39 a share for the Toronto-listed casino operator, Great Canadian Gaming said in a statement. That represents a 35% premium to the stock’s closing price of C$28.91. The transaction has been unanimously approved by Great Canadian’s board.
“We believe Apollo’s extensive experience in the gaming sector will provide additional strategic benefits to help expand our gaming and hospitality offerings and to secure our position as a long-term market leader,” Chief Executive Officer Rod Baker said in the statement.
Founded in 1982, Great Canadian operates 25 gaming, entertainment and hospitality facilities in Ontario, British Columbia, New Brunswick, and Nova Scotia. The company in March temporarily suspended operations at all its properties to contain the spread of Covid-19.
The pandemic has devastated the casino industry, as it has other businesses where people gather in large numbers, like movie theaters, concerts and restaurants. Sheldon Adelson’s Las Vegas Sands Corp. is exploring the sale of its casinos in Las Vegas, Bloomberg News reported last month, a move that would mark his exit from the U.S. gambling industry.
Apollo recognizes the challenges the industry is facing and is “committed to working with the management team, regulators and health authorities to allow the company to reopen its properties as soon as it’s safe to do so,” Alex van Hoek, a partner at the investment firm, said in the same statement.
Apollo said “certain Canadian institutions” might co-invest in the deal, without naming them. A number of Canadian funds — including the largest, Canada Pension Plan Investment Board — are limited partners in Apollo-managed funds.
The firm has a history of investments in the gambling sector. Apollo teamed up with TPG for a 2008 leveraged buyout of Harrah’s Entertainment Inc. This year, it took Italian sports betting operator Gamenet Group SpA private. In September, it was edged out by Caesars in a takeover battle for British gambling group William Hill Plc.
Apollo also agreed Tuesday to invest 500 million euros ($591 million) in Sazka Group AS, to support the European lottery company’s expansion plans across the region and North America.
Great Canadian took a hit last year from new rules in the province of British Columbia designed to reduce money laundering in casinos. A report released in 2017 by the provincial government found evidence of suspicious cash transactions in the company’s River Rock Casino Resort south of Vancouver.