Station Going Private

Station Casinos recently entered into a $5.4 billion buyout agreement with Fertitta Colony Partners LLC in a deal that values company stock at approximately $90 per share, according to a statement released February 26th.

The company’s board was first approached by FCP December 4th, when the group offered a bid of $82 per share, but in the months since, Station’s stock prices have surpassed that proposal, with some shareholders apparently fearing they were getting shorted in the deal.

The new offer brings the transaction’s total value to approximately $8.8 billion, including the assumption of nearly $3.4 billion in debt. Stock prices rose $3.20 to close at $86.50 the day of the announcement (the stock survived the February 27th Dow drop, ending the day at $86.48).

In a similar vein to other recent corporate buyouts, private equity group FCP is led by Station Casino chairman and CEO Frank J. Fertitta III, along with his brother, vice chairman and president Lorenzo Fertitta. The brothers joined forces with Colony Capital Acquisitions and have retained equity funding commitments from Blake and Delise Sartini, according to the statement.

Dan S. Ahrens, president of Ahrens Advisors, told Bloomberg News that the deal represents a growing trend by buyout firms, which are drawn to the real-estate holdings of casinos.

"These companies are starting to be seen for their real estate value," Ahrens said. "Most businesses that private equity looks at aren’t sitting on some of the most valuable real estate in the U.S."

Station owns and operates 13 casinos within the Las Vegas metropolitan area and retains interest in four others. The company also operates a tribal casino near Sacramento, Calif., on behalf of the United Auburn Indian Community.

The company’s real-estate assets are reportedly valued at nearly $1.5 billion.

Pending regulatory approvals, and a two-thirds vote by shareholders, the buyout is expected to be completed within six to nine months, the statement said. The Fertitta brothers, the Sartinis, and FCP apparently own nearly 25 percent of Station’s stock, and will be excluded from the vote.