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Pinnacle Increases Its Offer for Tropicana Owner Aztar

April 25, 2006|From Reuters

Casino operator Pinnacle Entertainment Inc. said Monday that it had raised its bid for rival Aztar Corp. to $45 a share, or about $1.7 billion, in the latest round of a bidding war for the owner of the Tropicana casinos in Las Vegas and Atlantic City, N.J.

The bid brings Pinnacle in line with Ameristar Casinos Inc., which has offered to buy Aztar for $45 a share.

This is the second time that Pinnacle, which signed an acquisition agreement with Aztar in March with an initial offer of $38 a share, has raised its offer for Phoenix-based Aztar. It raised its bid to $43 a share earlier this month.

Two other companies -- Columbia Entertainment and investment firm Colony Capital -- have also bid for Aztar. Colony bid $41 a share.

The highest offer so far is from Columbia Entertainment, the gaming affiliate of closely held hotel and casino owner Columbia Sussex Corp. The company bid $47 a share, or $1.74 billion, plus an undisclosed sum to buy Aztar's preferred shares.

Excluding preferred shares, Pinnacle's and Ameristar's bids are worth about $1.66 billion each.

Pinnacle's shares fell more than 5% after its new offer.

"We can no longer support the acquisition at these levels," Morgan Joseph analyst Adam Steinberg said in a research note, downgrading Pinnacle to "hold" from "buy." "We believe inclusion of the Aztar assets creates no value for Pinnacle shareholders."

Aztar acknowledged the new Pinnacle terms but said it was still evaluating Columbia's offer.

Analysts say Aztar has been the target of a bidding war in part because of 34 acres of land it owns on the Las Vegas Strip, which is one of the last parcels available there and considered ripe for redevelopment.

Aztar also has casinos in Missouri and elsewhere in Nevada.

Shares of Pinnacle tumbled $1.59 to $29.38 and Aztar slipped a penny to $46.34.

Ameristar rose 16 cents to $25.60.

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