At press time it was still not known who would win out in the bidding war for Aztar Corporation, which owns the Tropicana casino hotels in Las Vegas and Atlantic City. But the finale is sure to be exciting.
In late March, Los Angeles-based private equity real estate firm Colony Capital made a bid for the casino holder at $41 a share, slightly more than the $38-a-share takeover offer made by publicly traded Pinnacle Entertainment, a Las Vegas-based casino operator with holdings in Nevada, Louisiana, Indiana and Argentina. Pinnacle also owned one of the casinos in Mississippi that was destroyed by Hurricane Katrina.
Phoenix-based Aztar Corporation is a publicly traded company operating casinos and hotels in Nevada, New Jersey, Missouri and Indiana, including the two Tropicana assets.
Colony Capital, headed by famed investor Thomas Barrack, would become the country's third largest casino company if it succeeds in the deal.
But in mid-April, Pinnacle topped Colony's offer with a bid of $43 a share, or $1.65 billion. That bid values Aztar at approximately $2.4 billion including the assumption of approximately $723 million in debt.
However this may not be enough. Columbia Entertainment has submitted a bid of $47-a-share, an offer reportedly favored by Aztar's board of directors. Columbia Entertainment is the gaming division of Fort Mitchell, Kentucky-based Columbia Sussex Corp., which owns 83 hotels across the US. Ameristar Casinos has also been maneuvering to purchase the company, recently launching a bid of $45 per share.
At this point it looks unlikely that Colony will win out, which may put a cog in Barrack's grand casino acquisition plans. Barrack has been aggressively pursuing deals in the gaming sector, having spent more that $12 billion since 1991 on a variety of properties like The Savoy Group in Las Vegas and the Atlantic City Hilton Hotels. Just last month Colony led a consortium of private equity firms in the purchase of Kerzner International, the Bahamas-based hotel and casino operator.
Barrack has been banking partly on the assumption that large casino companies don't want to sell to their competitors. But corporate buyers have been increasingly aggressive lately, which may mean Barrack will need to switch strategy.