Why Ameristar Casinos Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Ameristar Casinos surged 20% today after fellow casino operator Pinnacle Entertainment agreed to buy it for about $870 million.

So what: The all-cash acquisition values Ameristar at $26.50 per share and represents a premium of 20% to its closing price on Thursday. Pinnacle is making the move to expand in the U.S. Midwest and south, as well as to trim costs, and judging by its own stock's 20% spike today, Mr. Market thinks management is paying a bargain price to do it.

Now what: The deal is expected to close by the end of the third quarter and be immediately accretive to Pinnacle's free cash flow and EPS. "As a result of the combination, we expect to achieve synergies and efficiencies of scale of at least $40 million annually, with potentially greater realization as we move forward through the integration process," Pinnacle CEO Anthony Sanfilippo said in a statement. So while Ameristar is likely to be all popped out at this point, Pinnacle shares might have plenty of long-term upside left in them.

Interested in more info on Ameristar?Add it to your watchlist.

The article Why Ameristar Casinos Shares Jumped originally appeared on Fool.com.

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