The Deal: Jacobs Drops Bid For MTR

NEW YORK (TheStreet) Jacobs Entertainment backed off of its spoiler bid to acquire MTR Gaming Group (MTNG) to support a sweetened cash offer from Eldorado Resorts for MTR.

In early October, Jacobs, a private real estate and gaming company, offered to acquire MTR in a merger that implied a $5.69 per share value for MTR Gaming, or about $145 million.

Jacobs owns 18% of MTR and had previously proposed that the casino company, with operations in West Virginia, Ohio and Pennsylvania, acquire Jacobs and its casinos in Colorado, Nevada, Virginia and Louisiana to diversify.

Jacob's October offer was meant to supplant MTR's Sept. 9 merger agreement with Eldorado, also a private company, that values MTR based on a 6.81 multiple of Eldorado's trailing Ebitda at the deal close. The merger included a cash election for $5.15 per share up to about 20% of MTR.

Jacobs challenged the valuation of the Eldorado deal and the likelihood that the Ebitda of Eldorado on the deal close would deliver the price suggested in the merger announcement.

Tuesday, MTR Gaming announced an amendment to the Eldorado merger agreement that Jacobs has committed to support, so Jacobs has dropped its spoiler bid.

Under the revised deal, Eldorado is increasing the cash portion of its merger to $6.05 from $5.15 per share for the 20% of total deal compensation available to shareholder in cash.

The altered value will also influence the mechanism for new share issuances for the stock portion of the transaction. The amendment to the merger agreement also raises the termination fee from to $6.0 million from $5.0 million.

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