Courier Post Article
Columbia acquires Tropicana parent
By WILLIAM H. SOKOLIC
Courier-Post StaffATLANTIC CITY
Columbia Sussex Corp., a little-known hospitality company, will acquire Aztar Corp., ending a two-month bidding war for the parent company of the Tropicana here.
Columbia CEO William Yung said the Aztar board signed a merger agreement Friday for $54 a share. The company will be known as Columbia Entertainment.
Yung flew to Atlantic City to meet with the Casino Control Commission to pursue licensure of its key executives. He'll also pay a visit to the Tropicana, which he said will be the flagship of the company's growing gaming empire. With its acquisition of Aztar, privately held Columbia will operate a dozen casinos, including the Tropicanas in Atlantic City and Las Vegas.
Pinnacle Entertainment, the chief rival in the quest, refused to move off its $51 a share offer, paving the way for the conclusion of the merger. "After careful consideration and due diligence, Pinnacle's management and board of directors have determined not to increase Pinnacle's offer to acquire Aztar," Daniel R. Lee, Pinnacle's chairman and CEO, said in a statement. Aztar must pay Pinnacle a break-up fee in the neighborhood of $78 million, said company spokeswoman Pauline Yoshihashi. Pinnacle initiated the bidding at $38 a share in mid-March.
Colony Capital LLC, which owns Resorts and Hilton in Atlantic City, offered $41 per share. In April, Ameristar Casinos entered the bidding, followed by Columbia. Colony didn't raise the stakes, and Ameristar threw in its chips earlier in the month, leaving a two-horse race.
"We would have gone as high as we needed until we got Aztar," Yung said.
Aztar had no choice but to accept the highest bid, as long as the bidder has the financial means to complete the deal, said Dennis Gomes, the former Aztar executive and the man behind the development of The Quarter, the successful dining, retail and entertainment center at the heart of the Tropicana in Atlantic City. "They've put up a lot of cash and have the financing in place," Gomes said. With no new jurisdictions except in Pennsylvania, gaming companies like Columbia have few opportunities for growth, and acquisition of a proven corporation is one of the best avenues, said analyst Cory Morowitz, of Morowitz Gaming Advisors, in Galloway Township. "Aztar is one of the few viable companies ripe for a takeover," he said.
Columbia, based in Fort Mitchell, Kentucky, entered the hotel business more than 30 years ago with the purchase of Days Inn properties. Over the years, the company added Holiday Inn, Marriott and Westin hotels to its portfolio, now up to 83 hotels. Yung entered the gambling market 15 years ago with the purchase of the High Sierra in Lake Tahoe. But it wasn't until the aftermath of Sept. 11, that the company made a serious turn into gaming. "The hotels got hurt by 9/11, but casinos didn't miss a beat, so we decided to get more into the casino line as opposed to hotels, he said.
Yung credited his chief marketing officer, Fred Buro, for taking a hard look at Atlantic City. Buro worked for Trump's casinos in the resort, including a stint as president of Trump Plaza Hotel Casino.
"Atlantic City was the one place that scared me a lot about this deal. I was concerned about Pennsylvania having gaming. And Yonkers. But Fred showed me how when Connecticut casinos opened, they didn't impact Atlantic City much. I feel comfortable right now."
Columbia is not an unknown quantity, Gomes said. "Industry people are aware of Columbia Sussex," he said. "They do have expertise. Fred Buro is knowledgeable. He used to be my protege. I helped him along early in his career, and he knows the gaming side. They can always hire others to broaden their expertise."
Colony Capital and Pinnacle were also unknowns before they sought entry into the Atlantic City market, Morowitz said.
For the first year or two, Columbia will continue with the renovations planned and under way by Aztar to bring the rest of the Tropicana up to the level of The Quarter, Yung said Friday.
Reach William H. Sokolic at (609)823-9159 or wsokolic@courierpostonline.comPublished: May 20. 2006 3:10AM
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By WILLIAM H. SOKOLIC
Courier-Post StaffATLANTIC CITY
Columbia Sussex Corp., a little-known hospitality company, will acquire Aztar Corp., ending a two-month bidding war for the parent company of the Tropicana here.
Columbia CEO William Yung said the Aztar board signed a merger agreement Friday for $54 a share. The company will be known as Columbia Entertainment.
Yung flew to Atlantic City to meet with the Casino Control Commission to pursue licensure of its key executives. He'll also pay a visit to the Tropicana, which he said will be the flagship of the company's growing gaming empire. With its acquisition of Aztar, privately held Columbia will operate a dozen casinos, including the Tropicanas in Atlantic City and Las Vegas.
Pinnacle Entertainment, the chief rival in the quest, refused to move off its $51 a share offer, paving the way for the conclusion of the merger. "After careful consideration and due diligence, Pinnacle's management and board of directors have determined not to increase Pinnacle's offer to acquire Aztar," Daniel R. Lee, Pinnacle's chairman and CEO, said in a statement. Aztar must pay Pinnacle a break-up fee in the neighborhood of $78 million, said company spokeswoman Pauline Yoshihashi. Pinnacle initiated the bidding at $38 a share in mid-March.
Colony Capital LLC, which owns Resorts and Hilton in Atlantic City, offered $41 per share. In April, Ameristar Casinos entered the bidding, followed by Columbia. Colony didn't raise the stakes, and Ameristar threw in its chips earlier in the month, leaving a two-horse race.
"We would have gone as high as we needed until we got Aztar," Yung said.
Aztar had no choice but to accept the highest bid, as long as the bidder has the financial means to complete the deal, said Dennis Gomes, the former Aztar executive and the man behind the development of The Quarter, the successful dining, retail and entertainment center at the heart of the Tropicana in Atlantic City. "They've put up a lot of cash and have the financing in place," Gomes said. With no new jurisdictions except in Pennsylvania, gaming companies like Columbia have few opportunities for growth, and acquisition of a proven corporation is one of the best avenues, said analyst Cory Morowitz, of Morowitz Gaming Advisors, in Galloway Township. "Aztar is one of the few viable companies ripe for a takeover," he said.
Columbia, based in Fort Mitchell, Kentucky, entered the hotel business more than 30 years ago with the purchase of Days Inn properties. Over the years, the company added Holiday Inn, Marriott and Westin hotels to its portfolio, now up to 83 hotels. Yung entered the gambling market 15 years ago with the purchase of the High Sierra in Lake Tahoe. But it wasn't until the aftermath of Sept. 11, that the company made a serious turn into gaming. "The hotels got hurt by 9/11, but casinos didn't miss a beat, so we decided to get more into the casino line as opposed to hotels, he said.
Yung credited his chief marketing officer, Fred Buro, for taking a hard look at Atlantic City. Buro worked for Trump's casinos in the resort, including a stint as president of Trump Plaza Hotel Casino.
"Atlantic City was the one place that scared me a lot about this deal. I was concerned about Pennsylvania having gaming. And Yonkers. But Fred showed me how when Connecticut casinos opened, they didn't impact Atlantic City much. I feel comfortable right now."
Columbia is not an unknown quantity, Gomes said. "Industry people are aware of Columbia Sussex," he said. "They do have expertise. Fred Buro is knowledgeable. He used to be my protege. I helped him along early in his career, and he knows the gaming side. They can always hire others to broaden their expertise."
Colony Capital and Pinnacle were also unknowns before they sought entry into the Atlantic City market, Morowitz said.
For the first year or two, Columbia will continue with the renovations planned and under way by Aztar to bring the rest of the Tropicana up to the level of The Quarter, Yung said Friday.
Reach William H. Sokolic at (609)823-9159 or wsokolic@courierpostonline.comPublished: May 20. 2006 3:10AM
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