Churchill Downs to buy $123.75m worth of its own shares from Duchossois Group
Churchill Downs (NASDAQ: CHDN ) said Monday it will repurchase 1 million shares from a unit of Duchossois Group at $123.75 per share.
The deal values the company at $123.75 million, a discount to Monday's closing price of $129.97 per share. The gaming company's board of directors approved the privately negotiated deal.
Total purchase price is $123.75 million. CDI will use available cash and borrowings under its senior secured credit facility to repurchase shares. “The transaction is expected to close on January 2, 2024,” a statement from Kentucky-based Churchill Downs said.
The deal with Duchossois Group is unrelated to the gaming company's previously announced share buyback program.
Churchill Downs May See Value in the Stock
Like a traditional share buyback program, Churchill Downs' agreement with Duchossois Group could signal to investors that the operator sees value in its shares.
The company tends to take steps that are beneficial to shareholders. In April, the company announced a 2-for-1 stock split. In addition to the stock split, the company announced a $500 million buyback program in September 2021, and its annual dividend has increased by more than 40% since 2010.
The company behind the Kentucky Derby had 74.8 million shares outstanding as of Monday's close, giving it a market capitalization of $9.69 billion. The stock has gained 22.94% year to date. It's unclear how long Duchosois Group has been investing in the regional casino operator.
"Duchossois Group, Inc. is a privately held company comprised of operating companies and investment companies. "Our operating businesses consist of leading brands in access control for the commercial and residential markets," the company's LinkedIn profile states. “Duchossois Capital Management, the Duchossois family’s private investment firm, creates long-term value by applying the deep industry knowledge, operational expertise and enduring capital base accumulated over more than a decade of family business to a variety of investment opportunities. "
Wall Street’s Beloved Churchill Downs
Although Churchill Downs has no stake in the Las Vegas Strip and concerns remain about the state of the U.S. horse racing industry, the stock is a betting favorite on Wall Street. Catalysts include a number of high-return capital projects, benefits from Exacta and P2E acquisitions, and an emerging growth story related to Historic Horse Racing (HHR).
Of the nine analysts covering the company, seven rate it a Strong Buy, while two rate it a Buy. The stock's average 12-month price target is $142.56, which represents a 9.69% upside from Monday's closing price.
No analysts have given Churchill Downs a sell rating over the past three years.
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Source: www.casino.org
