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Howard Stutz

Inside gaming: Bid for Boyd no more than a rumor

9 June 2008

LAS VEGAS, Nevada –- For several days last month, investors thought billionaire takeover artist Carl Icahn was making a run at Boyd Gaming Corp.

The reports seemed to make sense. Icahn was flush with cash after selling the Stratosphere and his Nevada casino holdings in February for $1.3 billion. More than 12.7 million shares of Boyd were traded between May 27-30 for as high as $17.22 and as low as $14.97. Chat room talk on financial Web sites concerning Icahn and Boyd Gaming was running rampant.

One problem. The rumor wasn't true. Boyd executives weren't aware of any Icahn interest, and documentation was never filed with the Securities and Exchange Commission. Veteran stock watchers said the move didn't fit Icahn's style. Also, the Boyd family controls 37 percent of Boyd Gaming, making a hostile takeover tough although not impossible.

Such is the nature publicly traded gaming companies face in the current economy. Most companies have seen their stock prices fall 20 percent to 50 percent since January. Boyd Gaming shares closed the week at $15.73, down from a $53 per share price a year ago.

Wall Street analysts said the volatile stock market has left an impression that opportunity has been created. Investors see long-term value in gaming companies' reduced price per share.

"These new valuation levels can seem pretty attractive, and a number of these companies are quite attractive as well," Deutsche Bank gaming analyst Bill Lerner said. "But until we get a more favorable credit market environment, we're not going to see too many leveraged buyouts or traditional acquisitions."

The Boyd-Icahn rumor is typical given the current conditions, Lerner said. An options trader told The Wall Street Journal that there is frequent speculation surrounding consolidation within the gaming industry.


One final note on Hong Kong businessman Richard Suen's $43.8 million verdict in a lawsuit against Las Vegas Sands Corp. A year ago, the company didn't think Suen would prevail.

In a May 2007 10-Q filing with the Securities and Exchange Commission, Las Vegas Sands discussed the pending lawsuit with investors.

"Based upon the advice of legal counsel, management has determined ... the probability of an unfavorable outcome in this matter is remote."


Wall Street gaming analyst Joe Greff and his team of researchers have moved to JPMorgan Chase, which completed a $2.3 billion buyout last month of Greff's old firm, Bear Stearns.

Greff's group covers 23 public companies in the gaming, lodging and cruise line industries.