Accel Entertainment (ACEL) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands presence in the local gaming market by adding the only active horse racing venue in Greater St. Louis and a master sports betting license in Illinois, leveraging distributed gaming expertise and a partnership with FanDuel.

• Provides entry into a complementary segment with low competitive intensity, supported by a strong management team and local market expertise.

• Builds on a proven platform with high returns on capital and free cash flow, targeting a $15 billion+ gross gaming revenue opportunity.

• Opportunity arose as sellers sought reliable partners, aligning with the company's experience and adjacency to its core market.

• Accel aims to maintain Fairmount's horse racing legacy and support the Illinois Racing Board's mission while enhancing amenities.

Financial terms and conditions

• Purchase price is approximately $35 million, paid in 3.45–3.5 million shares, with closing expected in Q4 2024.

• Additional planned investment of $85–$95 million over five years for casino development and track improvements, funded from the credit facility.

• Expected to be accretive to Adjusted EBITDA and Free Cash Flow at an implied multiple of about 5.5x, with double-digit returns.

• Fairmount generated $29 million in revenue and modest Adjusted EBITDA in 2023.

Synergies and expected cost savings

• Leverages core expertise in local gaming, player experience, capital allocation, and regulatory partnerships.

• Utilizes existing infrastructure for the temporary casino, minimizing initial capital outlay.

• Projected five-year Adjusted EBITDA of $20–$25 million and over 75% free cash flow conversion.

• Opportunity to improve Fairmount Park's modest current Adjusted EBITDA through operational enhancements and capital-efficient development.