Station Casinos accepts revised $5.5-billion offer

February 26, 2007

Ending nearly three months of silence since it first received a management-led buyout offer, Station Casinos Inc. has accepted a revised deal worth about $5.5-billion (U.S.) from a group led by the company's founding family and closely held real estate firm Colony Capital LLC, according to people close to the situation.

The Las Vegas-based casino company's board Saturday voted to enter into a definitive agreement with Fertitta Colony Partners LLC, which will pay $90 a share in cash to acquire the company and take it private, these people say.

Station, which first received an $82-a-share bid from the same group Dec. 4, has been quiet since the offer was first announced.

The deal also includes the assumption of about $3.4-billion in debt.

The group buying Station includes its chairman and chief executive officer, Frank Fertitta III; his brother, President Lorenzo Fertitta; their sister and brother-in-law, Delise Sartini and Blake Sartini; and Colony. Before the offer was announced late last year, the Fertittas and Sartinis together owned about 27 per cent of the company's outstanding shares.

It is unclear whether other potential bidders emerged during the nearly three months that passed since the initial offer.

People close to the matter say the company could attempt to solicit superior bids for the next 30 days.

A Station spokeswoman couldn't be reached to comment.

Shares of Station closed 30 cents higher at $83.30 on Friday on the New York Stock Exchange. Investors moved shares of Station as high as $85.19 on the day the original $82-a-share cash offer was announced, a signal they thought the price would go up.

The accepted proposal reflects a premium of about 30 per cent from Station's closing price Dec. 1, before the bid was disclosed.

Station Casinos, with a stock market value of about $4.8-billion on Friday, operates 16 casinos in what is termed the “locals market” in suburban Las Vegas, which caters to area residents rather than tourists on the famous Las Vegas Strip.

Much of Station's value lies in vast parcels of undeveloped land it owns in the Las Vegas Valley. The company has shunned development on the Strip and declined to pursue casino opportunities in the U.S. South, Midwest or Atlantic City, N.J.

The company has pursued potentially lucrative contracts to manage Native American tribal casinos and currently operates one in suburban Sacramento, Calif. In the past, the firm has said it will also build casinos in Reno, Nev.

The company is expected to retain its current management team, keeping Frank Fertitta at the helm, said a person with knowledge of the company's future plan.

This person also says the company will likely form at least one subsidiary to split off from the operating company parts of the new concern's real estate assets.

People close to the matter say the deal will likely close in six to nine months.

That is shorter than the projected close of the sale of Harrah's Entertainment Inc. to two private equity groups, because all of the parties involved in the potential Station deal already hold the necessary state casino licences.

Contact:
Lisa Baker
Owen Blicksilver PR, Inc.
+1 914-725-5949
lisa@blicksilverpr.com