Station Casinos to be bought for $5.4 billion

Neighborhood casino operator Station Casinos Inc. said Monday that it had agreed to be acquired by a private equity group that includes key members of its founding family for about $5.4 billion.

The group known as Fertitta Colony Partners offered $90 a share for the Las Vegas-based company, an 8% premium over its closing price of $83.30 a share Friday.

The group sweetened an earlier bid of $82 a share made Dec. 4. Since then, the share price has shot above that mark, and some shareholders sued shortly after the first offer was announced, saying the bid was too low.

The buyout group also will assume $3.4 billion in Station Casino’s debt as part of the deal.

After the announcement, Station shares rose $3.20 to close at $86.50.

Analysts said the offer more fairly accounted for the company’s extensive undeveloped land holdings in the Las Vegas area, which some have valued at around $1 billion.

The deal marks the latest foray into the casino industry by private equity bidders that have seen value in their steady cash flows and extensive real estate holdings. Harrah’s Entertainment Inc., the world’s largest casino operator by revenue, agreed in December to be bought for $17.1 billion by private equity firms Texas Pacific Group and Apollo Management Group in the largest going-private buyout of a casino company ever.

Fertitta Colony Partners was formed by Station Chief Executive Frank J. Fertitta III and President Lorenzo J. Fertitta, and Colony Capital Acquisitions, part of Colony Capital. Colony Capital already has casino holdings including Kerzner International, Resorts Atlantic City, Accor Casinos and the Atlantic City Hilton and Las Vegas Hilton. Colony most recently bid for Phoenix-based Aztar Corp., owner of the Tropicana casino-hotels in Las Vegas and Atlantic City, N.J., but walked away this spring when an affiliate of Columbia Sussex Corp. made a higher offer.