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MERGERS AND ACQUISITIONS: Tropicana gets new ownership4 January 2007
By Howard Stutz
LAS VEGAS, Nevada -- Kentucky-based Columbia Sussex Corp. became the owner of the Tropicana and three other casinos Wednesday after completing a $2.75 billion buyout of Aztar Corp.
The deal, which was initially announced almost eight months ago, gives new life to the 1,880-room Strip icon, although the new owners plan to demolish and remodel much of the 34-acre site over the next two years.
In November, while winning licensing approval from Nevada gaming regulators, Columbia Sussex officials said they would spend $2 billion to remodel the Tropicana, giving the site more than 9,000 hotel rooms and an additional hotel brand.
Separately, the Clark County Planning Commission on Tuesday approved use permits for new towers and renovations for the Tropicana. Improvements will include building 9.276 hotel rooms and 948 condo-hotel units.
Wimar Landco, a unit of Columbia Sussex Corp., sought the use permits.
Once finished, the property will have 10,224 guest rooms, of which 948 will be condos; 85,460 square feet of casino, 644,320 square feet of convention and meeting space; and 273,292 square feet of a retail space.
In addition to the Tropicana, Columbia Sussex picked up the Ramada Express in Laughlin, the Tropicana Atlantic City and a small casino in Indiana. With the Aztar purchase, Columbia becomes one of the largest privately held casino operators in the United States with 13 casinos. In Nevada, the company also operates The Westin on East Flamingo Road, the River Palms in Laughlin and the MontBleu and Horizon in Lake Tahoe.
Columbia Sussex President Bill Yung III told gaming regulators the company wouldn't shut down the Tropicana entirely during the development and construction process.
"The Tropicana properties have tremendous brand equity." Yung said in a statement Wednesday. "Over the next several months and years, we fully expect to leverage that equity for our customers, communities and employees."
Yung told gaming regulators that other than certain management level positions, he hoped to retain the bulk of the Tropicana staff. Various corporate functions, such as payroll, accounting and casino purchasing, will be handled out of Columbia Sussex's corporate headquarters in Fort Mitchell, Ky.
With deal closing, Columbia Sussex now employs almost 28,000 people across the United States, in Canada and the Caribbean. In addition to its casino operations, the company owns 75 hotels encompassing 27,000 rooms under such brands as Marriott, Hilton, Westin, Sheraton, Renaissance and Doubletree.
Columbia Sussex won a six-week bidding war for Phoenix-based Aztar last spring, agreeing to pay $54 a share for all outstanding shares of the company, assume $676 million in debt and convert the company's bonds.
Because the transaction did not close on Nov. 19, by agreement Columbia Sussex had to pay an increased price per share of just less than a penny per share a day. The extra 44 days made the stock price slightly under $54.40 a share.
Review-Journal writer Matthew Crowley contributed to this report.
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