Wall Street was abuzz with potential takeover news on Monday but not the expected news from Harrah’s Entertainment Inc. (HET) but rather Ameristar Casinos Inc. (ASCA).
The company’s shares surged prior to the opening of trading on the expectation that the sudden death of founder and chief shareholder Craig Nielsen, who served as chairman and CEO, would make the company a likely takeover target.
Nielsen, 65, reportedly died in his sleep Sunday at his Las Vegas home. He held 55.2% of the company’s outstanding shares and earlier this year had made a bid to take over Aztar Corp. (AZR).
Officials immediately announced that John Boushy, who had served as president under Nielsen, would be elevated to the chief executive officer’s post while Nielsen’s son, Ray, and Gordon Kanofsky, executive vice president, would serve as co-chairman. The latter two also are co-trustees of the Craig H. Nielsen Foundation which will inherit the founder’s shares.
Nielsen suffered serious injuries in an automobile accident about 20 years ago that left him paralyzed and wheelchair bound. He was dedicated to research and treatment of spinal cord injuries and formed his private foundation to further pursue that course.
The Utah native entered the gaming business by operating two small casinos, Cactus Petes Resorts Casino and The Horseshu. These he used as the foundation of a developing company and went public in 1993.
Ameristar now operates casinos in Nevada, Colorado, Missouri, Mississippi and Iowa.
Referring to Neilsen’s sudden passing, Dennis Forst, chief gaming analyst at KeyBanc Capital Markets wrote in a client note, "With this new development, Ameristar immediately becomes a possible takeover candidate due to its high-quality gaming assets."
The share of ASCA closed on Friday at $25.68 but prior to opening on Monday it had risen to $28.75. In early trading, it went up even further to $30.29 per share before closing at $18.54, up $2.86 per share.
Magna Entertainment Corp. (MECA) has seen both success (in Florida) and defeat (in Ohio) in its efforts to outfit its long list of racetrack operations with slot machines.
Now with slots operating at Gulfstream Park in Florida, the company is focusing on getting legislative approval for slots at its Maryland tracks, Pimlico and Laurel.
One benefit that will accrue from the most recent elections is a new governor in Maryland. Democrat Martin O’Malley is replacing Republican Robert Ehrlich. Although Ehrlich strongly supported racetrack slots, he failed to receive legislative support from a predominantly Democratic House.
O’Malley, on record as opposing casino gambling, has indicated he might support racetrack slots to save a dying industry, especially in light of slots being installed at competing racetracks in Pennsylvania.
Also, O’Malley has learned he now faces a $5 billion budget deficit without generating new state revenues. Whether this will play a role in getting him to actively support slots legislation was the question being debated by the racing industry.
Without slots, however, the sport’s future seemed dire.
"It’s the difference between life and death," said a racing spokesman. "Without it, we’re going to lose the industry to surrounding states."
Atlantic City’s 12 casinos saw their net income fall 14.1% during the third quarter of fiscal 2006, according to information provided by New Jersey gaming regulators.
Net revenues increased by 2% but operating profits declined, partially due to a three-day shutdown over the Fourth of July holiday caused by a budget dispute between the governor and lawmakers.
Showing declines for the quarter were: Showboat, owned by Harrah’s Entertainment Inc. (HET), down 19.9%; Resorts Atlantic City, down 16.8%; Atlantic City Hilton, down 7.3%; Harrah’s Atlantic City, down 6.4%; Borgata Hotel Casinos down 6.2% and Tropicana Casino, down 1.9%.
Gainers were the three Trump properties, Marina, Plaza and Taj Mahal, and the two Harrah’s, Bally Atlantic City and Caesars Atlantic City.
THE INSIDER: The Mississippi Gaming Commission has accepted the surrender of a gaming license for the former Casino Magic property. The license belonged to Pinnacle Entertainment Inc. (PNK) which swapped the Mississippi property for two riverboats owned by Harrah’s Entertainment Inc. (HET) in Louisiana.
In Missouri, Pinnacle has named its new casino in St. Louis the Lumiere Place.
Mohegan Sun has unveiled plans for a $700 million expansion of its casino in Uncasville, Conn.
The Reno, Nev., city council has approved plans by Station Casinos Inc. (STN) for a $500 million project at the Mount Rose Highway and South Virginia Street interchange.
An arbitrator has ruled that Youbet.com Inc. (UBET) should pay less than $1 million to TVG Network for an alleged underpayment of fees under a license and content agreement. TVG Network is a subsidiary of Gemstar-TV Guide International Inc. (GMST).
Landry’s Restaurants, Inc. (LNY) says it has completed the sale of 120 Joe’s Crab Shack restaurants for $192 million.
Isle of Capri Casinos Inc. (ISLE) will report its second quarter results on Thursday, Nov. 30, following the close of trading.
Analysts at Morgan Joseph Securities have downgraded the shares of WMS Industries (WMS) and Fortunet Inc. (FNET) from buy to hold.