VCG Holding Corp.(NASDAQ: VCGH) and Troy Lowrie and his affiliates have signed a letter of intent under which Rick’s Cabaret International, Inc(NASDAQ: RICK) will acquire all of the shares of VCG Holding to form the largest publicly traded operator of upscale gentlemen’s club in North America. Both Ricks Cabaret International, Inc and VCG Holding are giants in the gentlemen’s club industry and this is a huge acquisition for RICKS.

VCG Holding operates 20 clubs in 10 states while RICKS operates 18 nightclubs in seven states. As Eric Langan, President and CEO of Ricks Cabaret International (above) says “The combination of these two companies will result in a powerful operator that we believe would have generated earning before income tax and depreciation for 12 months ended September 30, 2009 of approximately $25.3 million without any of the add-backs we anticipate we will achieve through synergistic cost saving. I am confident that the combined entities can achieve meaningful savings through streamlined management and elimination of duplicate costs associated with being two separate public companies, including lower legal and accounting expenses.”

It sounds like both entities are satisfied with the merger as Tim Lowrie, Chairman and CEO of VCG Holding Corp.(NASDAQ:VCGH) says “We at VCG are very pleased that this merger will create the leading adult entertainment nightclub operator in the United States.”

This is a very interesting merger which could have some huge affects on the gentlemen’s club industry all over the country with 30 something clubs between the two entities.