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LAS VEGAS -- While one combatant dropped out of the bidding war for Aztar Corp., another suitor may have turned its attention toward a different prize.
Ameristar Casinos officially ended its quest to buy the Tropicana's parent corporation Wednesday, leaving at least three companies still seeking to purchase Phoenix-based Aztar.
Meanwhile, a source close to the negotiations said Pinnacle Entertainment Chairman and Chief Executive Officer Dan Lee, whose company is at the forefront of the Aztar bidding war, spent two hours Wednesday touring the Sahara with a representative of CB Richard Ellis. The commercial real estate company, according to sources, has been retained by the ownership of the 2,100-room Sahara.
The privately held Sahara is owned by the Bennett family and has been viewed as a takeover target since the death of casino operator William Bennett in 2002.
Company spokesmen told the Review-Journal in April that the Sahara receives expressions of interest weekly, but the family is interested only in offers in the $1 billion range from established buyers who have a gaming license.
The Sahara, with an 85,000-square-foot casino, sits on 17.45 acres at the intersection of Sahara Avenue and the Strip and would satisfy Pinnacle's interest in owning a Las Vegas casino-hotel.
Las Vegas-based Pinnacle Entertainment, a regional casino operator, is trying to determine its next step in the battle for control of Aztar.
Late Monday, Aztar determined that a bid by privately held Columbia Sussex, which offered an all-cash bid of $50 a share for the company, estimated at $2.56 billion, was "superior" to Pinnacle's offer of $48 a share in cash and stock.
Pinnacle has a signed merger agreement with Aztar but has until today to decide if it will exceed the offer by Columbia Sussex.
If Pinnacle drops out of the bidding, Aztar would have to pay the Las Vegas-based casino operator a $50 million termination fee plus cover up to $16 million in expenses.
A week ago, Ameristar had what seemed to be an inside track to acquire Aztar, which owns the Tropicana casinos in Las Vegas and Atlantic City and three smaller casinos in Laughlin, Indiana and Missouri, for $2.41 billion. By Friday, however, Pinnacle and Columbia Sussex had exceeded that offer.
In a one-sentence statement Wednesday, Las Vegas-based Ameristar said, "It has informed Aztar Corp. that it has no intention to pursue an acquisition of Aztar at this time."
Gaming analyst Adam Steinberg of Morgan Joseph has said that the offers from Ameristar and Pinnacle would amount to overpaying for Aztar.
"We view this as a positive for Ameristar and it reinforces our view of the company's fiscal discipline," Steinberg said in a note to investors.
Shares of Ameristar, traded on the Nasdaq National Market, rose on the news, closing at $26.43, up $1.17 or 4.63 percent.
Pinnacle, which generated $726 million in annual revenue in 2005, operates casinos in Reno, Louisiana, Indiana and Argentina. Ameristar, which took in $961 million in 2005, owns casinos in the Northern Nevada community of Jackpot and in Colorado, Mississippi and Missouri.
Gaming analysts have said an acquisition of Aztar made sense for both casino companies because it would transform either operator from a regional player to a gaming company of national scope through the purchase of casinos in Las Vegas and Atlantic City. However, the rising bids have soured some observers.
Pinnacle struck an original deal to buy Aztar in March for $38 a share, but a dozen bids have come in since.
JP Morgan gaming analyst Mario Kontomerkos said Wednesday that Pinnacle might increase its offer.
"If we are right, a bid could be the same or higher than Columbia Sussex's $50 a share bid because of the equity component in Pinnacle's current $48 a share offer," Kontomerkos said in a note to investors.
"Either Pinnacle will walk away and pocket $66 million, or the company will proceed with what should be a well-designed plan to extract significant long-term value in Las Vegas and Aztar's other assets. There is little doubt that the latter would likely cause weakness in the shares until management can clearly articulate its plan to investors."
Privately held Colony Capital, which owns the Las Vegas Hilton, bid $41 a share for Aztar in late March, but hasn't been heard from since.
Columbia Sussex is a hospitality and casino company based in Fort Mitchell, Ky., and operates four casinos in Nevada; The Westin, River Palms in Laughlin and the Horizon and Caesars Tahoe in Lake Tahoe.
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