Station Casinos latest in $26 billion US casino trading deals
Management of Station Casinos Inc., the operator of a dozen Las Vegas-area casinos, has offered to take the company private for $4.7 billion, the US gaming industry’s second- biggest takeover proposal this year.
Chairman Frank Fertitta III and his brother Lorenzo Fertitta, who is president, joined with Los Angeles-based buyout firm Colony Capital LLC to bid $82 a share, Station said in a statement.
The offer is 19% more than Station’s closing price Dec. 1, and 1% higher than its intraday record of $81.46 on April 5, according to news reports.
Companies such as Boyd Gaming Corp. and Station Casinos, which cater to Las Vegas residents, built more facilities than the market could handle in the past year, prompting Station to lower profit forecasts for 2006, according to Bloomberg.
Station opened the Red Rock Casino Resort & Spa in April, adding to its other regional properties including the Palace Station Hotel & Casino.
“It’s been kind of difficult for the market to absorb that new capacity,” Matthew Jacob, a casino analyst at Majestic Research in New York told Bloomberg.
The Fertitta brothers, along with former board member Blake Sartini, control about 27% of the company’s shares, according to a regulatory filing.
Stock in other mid-size casino companies also increased as investors bet they may be buyout targets.
More than $26 billion in proposed U.S. casino deals have been announced this year, exceeding the total in the previous six years combined, according to data compiled by Bloomberg.
Harrah’s Entertainment Inc., the world’s biggest casino company, received a $15.5 billion takeover offer from Apollo Management LP and Texas Pacific Group.
In May, investors in Kerzner International Ltd. agreed to a buyout led by the company’s management, the Kerzner family, for $3.2 billion. The acquirers included Colony Capital.
“A higher offer, perhaps in the mid-to high-80s, is possible,” wrote Harry Curtis, an analyst at JP Morgan.
“We would not rule out the possibility of a competing bid,” he added.
Station, founded by Frank Fertitta Jr., started as a Las Vegas bingo hall in 1976. The company has focused on attracting gamblers who live and work in Clark County, Nevada, which includes Las Vegas, an area that has more than doubled in size from 741,000 residents in 1990 to 1.7 million in 2005.
Station’s board formed a special committee to review the Fertittas’ proposal.
Report by David Wilkening
David
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