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Aztar gets sweetened Ameristar bid

Casino operator Aztar Corp. on Tuesday called a buyout offer of $1.7 billion in cash from Ameristar superior to a bid from Pinnacle.
/ Source: The Associated Press

Casino operator Aztar Corp. on Tuesday called a buyout offer of $1.7 billion in cash from Ameristar Casinos Inc. superior to a bid from Pinnacle Entertainment Inc., and gave Pinnacle until Friday to respond.

Under an offer made Monday, Las Vegas-based Ameristar said it would pay $47 for each of Aztar’s outstanding common shares, $2 more per share than Pinnacle agreed to pay in a revised offer it announced on Monday.

Aztar is the owner of one of the last big redevelopment opportunities on the Las Vegas Strip — the aging Tropicana resort on a 34-acre plot at a busy crossroads across from the MGM Grand, Excalibur and New York-New York hotel casinos.

Aztar’s holdings include the Tropicana hotel casino in Atlantic City, N.J., and riverboat casinos in Indiana and Missouri.

Ameristar’s offer automatically expires at 2 p.m. PDT on Friday. Pinnacle has until Friday to amend its signed merger agreement with Aztar or potentially walk away.

If Aztar breaks its deal with Pinnacle, it would have to pay a termination fee of $49.6 million and termination expenses of up to $16 million.

Pinnacle and Ameristar officials said Tuesday their companies had no comment.

Including the assumption of about $675 million in debt, the bid values Aztar at about $2.4 billion.

Phoenix-based Aztar is at the center of a bidding war between Ameristar, Las Vegas-based Pinnacle, Los Angeles real estate investment fund Colony Capital LLC, and Wimar Tahoe Corp., an affiliate of Fort Mitchell, Ky.-based Columbia Sussex Corp.

Ameristar’s latest bid matches a cash offer of $47 a share from the Columbia Sussex affiliate.

Some analysts have discounted the Columbia Sussex bid because of financing and regulatory concerns, with one calling the latest bid too high.

“Our concern relates to low projected returns on a redevelopment of the Las Vegas Strip, as well as the investment needed to upgrade the other Aztar properties,” analyst Adam Steinberg of Morgan Joseph & Co. Inc. said in a research note Tuesday.