The takeover battle for Aztar became a three-way fight when Ameristar Casinos on Monday upped the ante to $1.5bn in cash for the owner of the Tropicana casino in Las Vegas and Atlantic City.
Acquisition of Aztar would lift Ameristar from its current status as a smaller regional player with seven casinos in states such as Missouri, Mississippi and Nevada, to the fifth-largest public gaming company in the US.
Ameristar’s bid of $42 per share of Aztar tops an offer last week from Colony Capital, the US private equity firm, of $41 a share.
The two new offers threaten to derail Aztar’s agreement last month to be acquired by casino operator Pinnacle Entertainment for $38 per share, or about $1.4bn, including $723m in debt. Breaking the deal with Pinnacle would cost Aztar about $55m.
Shares in Aztar jumped nearly 6 per cent to $44.44 in midday trade on Monday. Shares in Ameristar fell 4.5 per cent to $24.59, while shares in Pinnacle rose $1.6 per cent to $28.63.
Some analysts say Ameristar has been sidelined as rivals aggressively snapped up casinos in the past few years. But the Las Vegas-based company arrives at the table with Wachovia, Merrill Lynch and Wells Fargo financing its bid for Aztar.
In a letter to Aztar’s board of directors, Craig Neilsen, chief executive of Ameristar, said: “Ameristar is prepared to enter into a merger agreement that would provide superior value to your stockholders.”
Colony Capital has not publicly released its offer letter to Aztar and it is unclear how the deal would be financed.
Winning Aztar is crucial as rapid consolidation in the US gaming industry leaves fewer players in the field. Aztar’s three suitors are keen to win its flagship properties in Las Vegas and Atlantic City, New Jersey, the two largest US casino markets.
The Tropicana in Las Vegas, a faded property ripe for renovation, occupies prime real estate on the Las Vegas Strip where casino operators such as MGM Mirage and Boyd Gaming are investing billions of dollars in new mega-resorts.
Ameristar said in a statement on Monday: “Not only would the transaction greatly expand Ameristar’s scale and geographic diversification…it would also provide Ameristar with one of the best remaining development opportunities on the Las Vegas Strip.”
Casinos are also pouring more investment into revitalising Atlantic City, the once down-at-heels seaside town, where the Tropicana casino recently completed a $275m expansion.
Aztar declined comment and did not give a timeframe for responding to the new offers.
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