by: Glenn Haussman.
Another major casino bites the dust as the consolidation wave continues. Station Casinos is officially going the way of the dodo bird with an announcement this week...
...that its accepted a deal to be acquired by a private equity firm. The deal, for $90 a share, is worth $5.4 billion plus the assumption of an additional $1.1 billion in debt.
Shares of the stock had been declining and the company is getting a significant bump from the share’s value which has been trading about $83 for the last few weeks. And it looks like the lion’s share of the company’s stockholders are ready to cash in their chips. Based upon the preliminary tally of shares voted, approximately 79% of total shares of Station common stock outstanding and approximately 72% of the outstanding shares of Station common stock (other than shares of Station common stock held by Parent, Merger Sub, the Rollover Stockholders or any of their respective affiliates) voted in favor of the transaction. Subject to satisfaction of all regulatory approvals and other customary closing conditions, Station expects the transaction to be completed as early as late September or in the fourth quarter of 2007.
Buying the company is Fertitta Colony Partners LLC, a Nevada limited liability company and FCP Acquisition Sub, a Nevada corporation and a wholly-owned subsidiary of Fertitta. Following the consummation of the merger, the issued and outstanding shares of non-voting common stock of Station will be owned by affiliates of Frank J. Fertitta III, Chairman and Chief Executive Officer of Station, Lorenzo J. Fertitta, Vice Chairman and President of Station, Blake L. Sartini and Delise F. Sartini (collectively, the "Rollover Stockholders") and affiliates of Colony Capital LLC.
Station is a good but as the company has several newer prized assets and some older properties which are frequented by the locals market. Holdings include the multi-billion dollar Red Rock Casino Resort Spa, Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino, Gold Rush Casino and Lake Mead Casino in Henderson, Nevada. Station also owns a 50% interest in Green Valley Ranch Station Casino, Barley's Casino & Brewing Company and The Greens in Henderson, Nevada and a 6.7 percent interest in a joint venture that owns the Palms Casino Resort in Las Vegas, Nevada.
"With private equity, a company can be longer sighted, without the short- term pressure," Dan Ahrens, president of Aherns Advisors in Dallas told Bloomberg News when the news was first announced. "There has been a great deal of private- equity interest in gaming."
And casino industry stocks continue to be tops on Wall Street.
"All casino operators remain in play and should continue trading at or above the high end of their historical valuation range," David Katz, an analyst at CIBC World Markets in New York, wrote Monday in a research note.
One of the new owners is Colony Capital, a company rumored to be planning an expansion in Atlantic City. It currently owns a major undeveloped Boardwalk fronted parcel adjacent to its Resorts International Atlantic City. The company also owns the Las Vegas Hilton, Resorts East Chicago, Resorts Tunica, Atlantic City Hilton and Bally's. Colony is also a partner in Accor Casinos in Europe. The firm has invested approximately $20 billion in over 8,400 assets through various corporate, portfolio and complex property transactions.
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