$1.4 billion takeover offer made for casino operator
Wednesday, March 8, 2000 | 11:12 a.m.
Pinnacle Entertainment Inc., the owner of the Boomtown hotel-casino in Northern Nevada and former owner of the Hollywood Park Race Track, is considering a buy-out offer from the owner of Harveys Casino Resorts.
Closely held Colony Capital Inc. of Los Angeles, a private investment firm, is the majority owner of Harveys, and offered $25 a share, or about $675 million, for the diversified gaming company based in Glendale, Calif. With the assumption of $700 million in debt, the offer values Pinnacle at about $1.4 billion.
The deal is subject to a definitive merger agreement and regulatory approvals.
Harveys operates a 740-room hotel in Stateline, on Lake Tahoe, and formerly managed and had a 40 percent ownership stake in Las Vegas' Hard Rock hotel-casino.
Pinnacle, which changed its name from Hollywood Park Inc. last month, agreed to negotiate exclusively with Colony through the end of March. Pinnacle postponed its April 18 annual shareholders meeting and plans to set a new date in the next few weeks.
The Wall Street Journal reported today that Colony, a private Los Angeles company headed by investor Tom Barrack, is interested in expanding its gambling interests and once offered by buy Trump Hotels & Casino Resorts Inc.
The company is interested in Pinnacle because of its ownership of casinos in niche markets away from Las Vegas and Atlantic City.
Pinnacle owns Boomtown in Verdi and formerly operated a Boomtown property on Interstate 15 at Blue Diamond Road, just south of Las Vegas, now known as the Silverton Hotel-Casino and RV Resort.
Today, the company owns eight casinos, four with hotels.
It has dockside properties in Bay St. Louis and Biloxi, Miss., and riverboat operations in Bossier City and Harvey, La. It also is a 51 percent owner of two land-based casinos in Argentina.
Pinnacle also is building the Belterra Resort and Casino, a hotel-casino complex in Southern Indiana about 35 miles southwest of Cincinnati.
The company receives lease income from two card club casinos in metropolitan Los Angeles.
Pinnacle has been moving out of the racetrack business, completing the sale of the Hollywood Park Race Track in California to Churchill Downs Inc. for $140 million in September. Last month, the company announced it had signed an agreement to sell Turf Paradise, a Phoenix race track to private investor Jerry Simms for $53 million.
Harveys was a player in Las Vegas until October 1997 when gaming regulators approved Hard Rock Hotel co-founder Peter Morton's bid to buy out his Harveys Casino Resorts partners for $45 million.
Harveys owned 40 percent of the rock-and-roll-themed property when it opened in 1995, but the relationship soured when the partners disagreed over expansion plans.
Morton paid Harveys $24.2 million to end the company's deal to manage the Hard Rock and an additional $20.7 million to buy Harveys portion of Hard Rock common stock.
The former general manager of the Hard Rock, Stephen Cavallaro, in September was named president and chief executive officer of Travelscape.com Inc., an online travel and hotel reservation company based in Las Vegas.
Harveys flagship property at Lake Tahoe is a 19-story hotel with an 8,800-square-foot casino. The resort includes eight restaurants, a spa and a wedding chapel.
Pinnacle stock, which trades on the New York Stock Exchange, closed Tuesday at $19.25. Today, the stock was up $1.625 to $20.875. The value of the stock has more than doubled in the past year.
Standard & Poor's Corp. announced today that it may cut its "BB-" credit ratings on the debt of Pinnacle and Harvey's.
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