Station Casinos as a public entity is gone. Stocks ceased being traded this week on the New York Stock Exchange as the lucrative gaming company has been sold to a private entity.
The deal, which closed this week took the venerable casino company and folded its assets into a portfolio owned by Fertitta Colony Partners in a deal worth $8.8 billion.
Station Casinos sold all its outstanding common stock for $90 per share in cash. This represents a premium of approximately 30% over the closing share price of Station’s common stock on December 1, 2006, the last trading day before disclosure of the initial offer made by FCP to acquire Station. The total value of the transaction is approximately $8.8 billion, including the assumption or repayment of approximately $3.4 billion of debt. While the deal was expected to take between six and nine months to close, it took closer to a year.
However, it puts Fertitta Colony Partners into the forefront of a quickly consolidating casino industry. Station is known as a major player in the locals Las Vegas market, a substrata of more well known Las Vegas Strip scene. In recent years, Station had been developing more expensive and upscale projects including the Red Rocks Resort, which cost more than a $1 billion. Station also owned and operated many other properties including Green Valley Ranch, Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino and more. Station also has strong cash flow, brining in net revenues of more than $1.1 billion a year.
It will combine those assets with projects such as Resorts International Atlantic City, the Las Vegas Hilton, Resorts Tunica, Atlantic City Hilton and Bally's Tunica. Colony is also a partner in Accor Casinos in Europe. Fertitta Colony Partners has invested approximately $36 billion in over 8,500 assets through various corporate, portfolio and complex property transactions. Fertitta Colony Partners is made up of Frank J. Fertitta III, Chairman and Chief Executive Officer of Station, affiliates of Lorenzo J. Fertitta, Vice Chairman and President of Station, affiliates of Blake L. Sartini and Delise F. Sartini and affiliates of Colony Capital, LLC
Now it’s looking to get a piece of the Las Vegas locals market, which had been until recently a core strategy for several major Las Vegas based gaming companies. Station is so well entrenched in the local market that more than 80 percent of the population base in the Las Vegas metropolitan area lives within a 5-mile radius of one of the Company’s facilities.
But the rules of the gaming industry are changing and now locals casino companies must either diversify into different markets or get scooped up by a bigger player. Station shareholders figured that would be the best scenario for the company. Everyone got a big cash out and now get to be a part of a bigger, more aggressive entity.
Taking a different tactic, rival locals gaming company Boyd Gaming began investing in projects outside the local market. In Atlantic City it partnered with MGM-MIRAGE to build The Borgata, the first Las Vegas style resort to come to the City by the Sea.
Boyd is also developing Echelon. Scheduled to open summer 2010, Echelon will feature a mix of upscale hotels that each appeal to a different type of guest seeking a luxury experience. There will be the mainstream mega resort Hotel Echelon with 2,500 rooms and the smaller 650 unit Suites at Echelon. Catering to younger travelers will be a pair of boutique properties Delano and Mondrian (860 and 550 room respectively), while the five star Shangri-La Las Vegas will appeal to the uppermost end of the market with its 282 guest rooms and 71 premium suites.
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