Casino Operator Pinnacle to Buy Tropicana’s Parent
Pinnacle Entertainment Inc., which operates casinos in smaller markets, said Monday that it would buy Tropicana owner Aztar Corp. for about $1.45 billion in cash, extending its reach into the prime markets of Las Vegas and Atlantic City, N.J.
The first major casino takeover deal this year positions Pinnacle -- which is dwarfed by chains such as Harrah’s Entertainment Inc. and MGM Mirage Inc. -- to muscle into the two main U.S. casino markets.
Pinnacle, though based in Las Vegas, has no casinos there. Its properties are elsewhere in Nevada and in Indiana, Louisiana and Argentina.
“We realized that one of the competitive tools we did not have was a casino in Las Vegas and a casino in Atlantic City,” Chief Executive Daniel Lee said. “The ability to market across markets ... is a pretty important thing.”
Pinnacle said it would buy all of the outstanding shares of Aztar for $38 each in cash.
The company said the deal, which also involves the assumption of about $723 million in Aztar debt, represented a premium of about 24% over Aztar’s closing price Friday.
William Schmitt, an analyst at CIBC World Markets, said the deal appeared a little expensive because of the cost of 34 acres of land that Aztar owns in Las Vegas: “I think they are paying up for the land in Las Vegas.”
Aztar shares rose $6.51, or 21.2%, to $37.21. Pinnacle rose $1.04, or 3.7%, to $29.
This is the first major deal in the gambling industry since last year’s closing of Harrah’s acquisition of Caesars Entertainment Inc., making it the world’s largest casino operator, and MGM Mirage’s buyout of Mandalay Resort Group.
Pinnacle and Aztar combined will have 12 gaming properties in the United States, including Nevada, New Jersey, Louisiana, Missouri and Indiana, as well as projects under development, and more than 8,800 hotel rooms.
Phoenix-based Aztar owns the Tropicana casino resorts in Las Vegas and Atlantic City, among others, and Pinnacle owns such properties as L’Auberge du Lac Hotel & Casino in Lake Charles, La.
The boards of directors of both companies have approved the deal, which will be fully financed and is expected to close by the end of the year, Pinnacle said.
