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Rivals Team to Bid for Santa Anita

Real estate: Colony Capital joins previous bidder Koll-Apollo group with a $230-million offer.


Two rival groups seeking control of Santa Anita Cos. said Monday that they have joined forces to make a modestly higher bid for the Arcadia-based racetrack and real estate concern, a transaction that would pay up to $230 million to Santa Anita stockholders.

The groups are Los Angeles real estate firm Colony Capital Inc. and the team of Koll Co. of Newport Beach and Apollo Real Estate Advisors, an arm of the Apollo investment firm run by New York financier Leon Black.

Previously, the Koll-Apollo group had offered to gain control of Santa Anita in exchange for injecting $91.5 million in cash into the company, which has suffered from lackluster results and a weak balance sheet in recent years. The group also planned to offer dividends and stock buybacks as a way for Santa Anita stockholders to reap as much as $27 for each of their shares.

The new offer from Koll-Apollo and Colony Capital would increase that equity infusion by $25 million, to $116.5 million. But terms for payments to stockholders remain the same.

That disappointed some investors on Wall Street, who were betting that a new bid would surface offering more than $27 for each of Santa Anita's shares. As a result, the stock fell 62.5 cents a share to close at $27.875 in New York Stock Exchange trading.

Santa Anita executives issued a short statement saying the company will evaluate the new bid "along with other strategic alternatives," but they declined to elaborate.

A spokesman for the Koll-Apollo-Colony group called the new offer "a very reasonable deal" that offers more cash for Santa Anita's operations, combines the three firms' financial and real estate expertise to run Santa Anita and gives existing stockholders the option to cash out.

Despite its pullback Monday, Santa Anita's stock has doubled in price since the takeover struggle for the company began in August, when Santa Anita agreed to sell a 45% stake to Colony Capital.

That deal eventually was scrapped in the face of the Koll-Apollo effort, but that bid didn't gain Santa Anita's acceptance, either. So the three firms decided to make a joint offer, the spokesman said.

Santa Anita's stock is currently trading for a rich 40 times the 69-cents-a-share profit that analysts expect Santa Anita to earn in 1997. But the investor groups want Santa Anita not only for its existing assets, but also for its odd "paired-share" structure that offers enticing tax benefits.

Santa Anita, with revenue last year of $77.2 million, is actually two companies with "paired" stocks that trade as one: Santa Anita Operating Co. runs the track, and Santa Anita Realty Enterprises Inc. owns the track and other real estate.

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