Company stock climbs amid speculation of buyout

Friday, Jan. 9, 1998 | 2:58 a.m.

Either way, the principals are keeping mum about their intentions - and Wall Street rumors.

"As a matter of policy, we don't comment on market rumors," Circus Circus spokeswoman Sarah Ralston said Friday, responding to rumors of a possible sale of the company.

Circus Circus stock climbed $.38 a share Friday to close at $23 3/4 . The increase came on a day when the Dow Jones industrial averages dropped 222 points.

The stock was trading as low as $20.06 on Dec. 29. It lost 40 percent of value in 1997.

Circus Circus stock has made a significant turn-around the first nine days of 1998 while the Dow has lost 330 points.

"There's certainly a lot of buzz about it," Jason Ader, a gaming analyst for Bear Stearns, said of the Circus Circus stock performance in 1998.

Ader said Circus Circus stock was "one of the worst performing gaming stocks in 1997."

"It's got a lot of people focused as to whether there's an opporunity in 1998," Ader said after the market closed Friday.

The company's stock hit a 52-week high of $36.50 last Feb. 6.

Rumored buyers include Hilton Hotels Corp. - which lost a bid in November to buy ITT and its Caesars gaming properties - and Patriot American Hospitality, a real estate investment trust.

"There's a rumor a day in this business," Hilton spokesman Marc Grossman said Friday. "We just don't comment on rumors."

Bruce Turner, a gaming analyst for Salomon Smith Barney, discounted Hilton as a buyer.

"It's the nuttiest thing I've ever heard," he said of Hilton rumors.

Turner said Circus was hampered by "older product portfolio" at a time when $6.5 billion in new Las Vegas megaresorts will open over an 18-month period beginning in the fall of 1998.

"This is more net new investment in Las Vegas than the past six years," Turner said. "You're going to have some indigestion."

There is concern in the industry that while the visitor count was up in Las Vegas in 1997, it did not keep pace with the addition of some 10,000 new hotel rooms.

Turner called the rise in Circus Circus stock prices "pure speculation."

Rumors of a possible Circus Circus deal have circulated in Las Vegas and on Wall Street for months.

Circus Circus has 15 properties, with another, Project Paradise, under construction and scheduled to open in late 1998 or early 1999.