Everbay Capital Raises Concerns Over Golden Entertainment CEO’s Buyout Proposal
Investment Firm Everbay Capital Challenges Golden Entertainment Buyout Plan
Everbay Capital, an investment firm based in New York, has expressed strong reservations regarding Golden Entertainment’s recent announcement. The company revealed that its CEO, Blake Sartini, intends to acquire the business. Everbay Capital claims that the offer price of $2.75 per share for the remaining company, after the divestiture of its real estate assets, significantly undervalues the company’s true worth.
Concerns About Shareholder Value and Transaction Timing
The investment firm urged Golden Entertainment’s board to provide more detailed disclosures and to revise the transaction agreement to better protect shareholder interests. Everbay emphasized that anyone familiar with the gaming industry would recognize the current valuation as unattractive. They also highlighted the timing of the deal, noting it comes just days after Golden Entertainment’s stock hit a four-year low, suggesting the CEO may be leveraging the depressed share price to gain control of the operational business, known as RemainCo, at a substantial discount.
Valuation Comparison Underscores Potential Undervaluation
Everbay Capital contrasted the proposed buyout price with a comparable recent deal, referencing MGM’s sale of its MGM Northfield Park operations to Clairvest Group at a 6.6x EBITDA multiple. Applying a similar multiple to RemainCo suggests a valuation near $15.80 per Golden Entertainment share—far exceeding the $2.75 offered in the CEO-led buyout.
Additional Transaction Structure Worries
Beyond valuation, Everbay Capital raised concerns about how the deal pairs the sale of casino operations and real estate into a single transaction, effectively forcing shareholders to accept a low price for RemainCo in order to sell the real estate assets. They questioned whether a thorough sales process was conducted for RemainCo before agreeing to sell it to Sartini.
Proposed Changes to Protect Shareholder Interests
Everbay recommended important modifications, including separating the shareholder votes on the real estate and operational sales, extending the go-shop period from one month to three months, and removing the termination fee should the deal be ended during this period in favor of a better offer. Furthermore, they requested that approval for the RemainCo transaction be secured specifically from a majority of Golden’s independent shareholders. Currently, the entire transaction values Golden Entertainment at approximately $30 per share, with about 90% of the consideration coming in VICI Properties shares.
