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July 25, 2014

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Jacobs tries to top Eldorado offer for MTR Gaming

MORGANTOWN, W.Va. — Jacobs Entertainment is trying to buy West Virginia-based MTR Gaming Group, offering a deal it says is 10 percent richer for shareholders than MTR's planned merger with Eldorado Resorts.

In U.S. Securities and Exchange Commission filings Wednesday and a letter to MTR, chief executive Jeffrey P. Jacobs said his unsolicited offer of $5.69 cents per share is worth $15.6 million more than Eldorado Resorts' offer of $5.15 per share.

He also argues that MTR's board wouldn't be selling control of the company and could still appoint the majority of the board of directors.

The pending merger announced last month would give Nevada-based Eldorado 55 percent of the new company, which would have a combined per-share value of about $1 billion.

Jacobs owns more than 5 million shares, or 18 percent, of MTR's stock.

Eldorado Senior Vice President Tom Reeg declined comment on the offer Thursday. MTR didn't immediately respond. Its stock, however, surged in morning trading.

MTR runs Presque Isle Downs & Casino near Erie, Pa., Mountaineer Casino and Racetrack & Resort in Chester, W.Va., and Scioto Downs Casino & Racetrack near Columbus, Ohio.

Because he's already licensed in MTR's locations, Jacobs argues his proposal would win regulatory approval faster and is therefore superior.

Eldorado operates the Eldorado Reno and Silver Legacy, both in Reno, Nev., and Eldorado Shreveport in Louisiana.

In announcing their merger last month, MTR and Eldorado said it would create a powerful force that could play a role in the consolidation of the gambling industry. If shareholders and regulators approve, the new company will be publicly traded, with Eldorado's Gary Carano serving as chief executive officer.

Both companies have been limited by size, lack of geographic diversity and balance sheets.

The combined company will have nearly 10,000 slot machines and video lottery terminals, 283 table games and 3,282 hotel rooms. Eldorado employs 4,550 people, and MTR employs 2,848.

In May, Jacobs offered to sell his company to MTR in exchange for $144.5 million in MTR stock, saying it would help the company diversify. He withdrew that offer after the Eldorado announcement.

Jacobs Entertainment also owns the Colonial Downs thoroughbred track and 10 off-track betting facilities in Virginia; The Lodge Casino at Black Hawk and the Gilpin Hotel Casino, both in Colorado; the Gold Dust West-Reno, the Gold Dust West-Carson City and the Gold Dust West-Elko in Nevada; and 23 video poker truck stops in Louisiana.

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