Columbia Sussex wins Aztar with $2.75 billion bid

May 23, 2006 5:17 AM

What was it that Yogi Berra said about the game not being over ’til it’s over?

That’s essentially the way Wall Street viewed the two-month saga regarding the purchase of Aztar Corporation (AZR) and its multiple suitors. From the middle of March until the middle of May, the casino operator that also held a valuable piece of real estate on the Las Vegas Strip evaluated a constant stream of bids.

Finally, Columbia Entertainment, the gaming affiliate of Ft. Mitchell, Ky. based Columbia Sussex added one dollar to its high bid of $53 per share to push bridesmaid suitor Pinnacle Entertainment Inc. (PNK) away from the altar.

The fully-financed transaction (apparently the company had a blank check from the financial institution Credit Suisse) is valued at $2.75 billion, including paying the B preferred stockholders $573.13 per share and assuming the Aztar debt of $676 million. Aztar said it also paid Pinnacle Entertainment a $78 million breakup fee as specified in a previous agreement.

Although new to the gaming industry, relatively-speaking, Columbia Sussex has made a rapid move to becoming a major player. It already has casinos in Nevada, Louisiana, Mississippi, and Illinois. With this purchase, it will add properties in Atlantic City and Indiana currently operated by Aztar.

However, the privately-owned company was better known as the operator of more than 80 hotels in the U.S., Canada and the Caribbean.

A jubilant William J. Yung, III, president and CEO of Columbia Sussex, was reported as saying, "This is a breakthrough transaction for our company which will significantly enhance our gaming assets in key growth markets and strengthen our position as one of the leading owners, developers and operators of hotels, resorts and casinos.

"Aztar’s unique assets are a perfect fit with our existing hotel and gaming properties, and we see many opportunities to improve financial performance by expanding the Tropicana brand, finishing the building projects in Indiana and Atlantic City and developing the Las Vegas property."

One of the first projects Columbia Sussex plans to address will be the sale of Aztar’s riverboat casino in Caruthersville, Mo. Last year, Columbia Sussex officials ran into regulatory -problems in Missouri.

However, the company has had no licensing problems in other states since entering the gaming industry.

Just last week, the company won praise from Nevada tourism officials because of the conversion work it is completing at the Caesars Tahoe Hotel/Casino that has become the upscale Montbleu Resort Casino and Spa.

Columbia Sussex bought the property from Harrah’s in 2005.

Almost as an aside to its quest for Aztar, Columbia Sussex successfully negotiated the purchase of the Casino Queen riverboat casino located in East St. Louis, Ill., across the Mississippi River from the famed St. Louis, Mo., arch.

The riverboat was the brainchild of Las Vegas gaming magnate Michael Gaughan and the Bidwill Family of Chicago. The Bidwills have racetrack and NFL interests.

Terms of the deal were not disclosed.

Pinnacle purchase

The news was not all bad for Pinnacle Entertainment Inc. last week. In addition to receiving the breakup fee from Aztar, Pinnacle received notification from the bankruptcy court that it could go ahead with the purchase of the President Casino in St. Louis, Mo.

Pinnacle had announced earlier that it had entered into an agreement with the owners of the President’s capital stock to acquire the shares for a total of $31.5 million. However, the deal needed the approval of the bankruptcy court.

Last year, Pinnacle was outbid for the President riverboat by Columbia Sussex but that deal fell through because of a licensing problem with the Missouri regulators.

Herbst moves north

Privately-held Herbst Gaming Inc. has signed a definitive agreement to merge with The Sands Regent (SNDS) by acquiring all the company’s stock at $15 per share. The transaction was valued at $148 million.

The company said the move will enable Herbst to further broaden and diversify its geographic presence within the state of Nevada.

The combined companies will own and operate 12 casinos in three states as well as a major slot route operation in Nevada.

THE INSIDER: Art Chevalier, the brokerage veteran who for several years operated branches for Quick and Reilly and later Bank of America, has moved the offices of First Mid-America Investments to 3993 Howard Hughes Parkway. First Mid-America Investments, founded in 1999, now has branches in eight cities.

A subsidiary of Carl Icahn’s American Real Estate Partners LP, owners and operators of the Stratosphere Hotel/Casino and Arizona Charlie’s Decatur and Arizona Charlie’s Boulder casinos, has been approved to acquire the Flamingo Laughlin Hotel/Casino from Harrah’s Entertainment Inc. (HET) for $170 million. The agreement also includes a 7.7 acre tract of undeveloped real estate in Atlantic City.

Well-known casino executive Gene Kilroy has been name VIP casino host for the Luxor Hotel/Casino in Las Vegas.

The Pennsylvania State Harness Racing Commission has approved the sale of The Meadows racetrack by Magna Entertainment Corp. (MECA) to the partnership of Millennium Gaming and Oaktree Capital Management for $225 million. Bill Paulos and Bill Wortman are the principals in Millennium Gaming.

Wynn Resorts Ltd. (WYNN) has notified the SEC that it has replaced its outside auditors, Deloitte & Touche, with the firm of Ernst & Young.

Riviera Holdings Corporation (RIV) says Ron Johnson has resigned his posts as executive vice president of gaming operations and as president of Riviera Black Hawk, Inc.

Multimedia Games Inc. (MGAM) has announced that Craig Nouis, its vice president and CFO, has resigned to pursue other business opportunities.

The European Union says it see no antitrust problems in the acquisition of GTECH Holdings Corp. (GTK) by Italy’s Lottomatica.