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Best of Liz Benston

Gaming Guru

Liz Benston

Boyd Not Interested in Buyout

27 October 2003

Boyd Gaming Corp.'s top executive said he's not interested in selling the casino company that his father founded nearly 30 years ago.

"We've always been an acquirer, not an aquiree," William Boyd said in an interview prior to a speech he gave to the Jewish Federation of Las Vegas at the company's California hotel-casino in downtown Las Vegas Friday. "We've never been in the market."

The comments came a few weeks after the company was named as a potential takeover target in a widely read column that ran in the Oct. 20 issue of BusinessWeek magazine.

The "Inside Wall Street" column fingered Boyd Gaming because of the company's low price-to-earnings ratio relative to casino competitors, and quoted Jason Ader of Hayground Cove Asset Management.

"With the stock cheap and consolidation on the rise, Ader sees Boyd as takeover bait," columnist Gene Marcial wrote.

Ader was a gaming analyst at Bear, Stearns & Co. prior to founding the New York money management firm.

Boyd said he expects such talk in the gaming industry given the recent pace of acquisitions. Also, rumors about the company merging with MGM MIRAGE may have heated up after Boyd Gaming's joint venture with its competitor to build the Borgata resort in Atlantic City, he said.

MGM MIRAGE and Steve Wynn also are interested in buying Boyd, Ader noted in Marcial's column.

In October 1999, Boyd Gaming was named in "Inside Wall Street" as a potential takeover target of what was then Wynn's Mirage Resorts Inc. MGM Grand Inc. bought out Mirage Resorts Inc. the following year.

"We're going to continue to grow," Boyd said Friday. He and his family own about half of the company's common stock.

"You can never say 'never.' But there's nothing we have talked about and we haven't been approached," he said.

Boyd Gaming stock fell 10 percent to $13.57 on Oct. 6 after the company warned that third-quarter profit would fall short of analysts' estimates. The company primarily blamed lower returns at the Stardust on the Strip and at its Par-A-Dice riverboat casino in East Peoria, Ill., recently hit by higher gaming taxes in that state. Shares have since returned to previous levels, rising about 13 percent through Friday to $15.35.

At the Jewish Federation luncheon, Boyd spoke of the history of Boyd Gaming, which officially began in 1975 with the opening of the California hotel-casino.

"Everyone thought we were crazy to open a casino off Fremont Street," he said.

Boyd Gaming's Sam's Town casino followed in 1979 on Boulder Highway, one of Las Vegas' first locals' casinos.

"Many of our friends and contemporaries felt we really had lost all of our marbles to build a casino in the middle of nowhere. Fortunately Sam's Town was successful from the first day."

The company was asked by the Gaming Control Board to operate, then buy the Stardust -- whose license was being revoked for alleged skimming. Boyd Gaming purchased both the Stardust and the Fremont in 1985. Boyd Gaming went public in 1993 to take advantage of gambling expansion in other states. The Eldorado and Joker's Wild casinos came into the Boyd fold at that time. Main Street Station, the company's third downtown casino, opened in 1996.

"We have grown quite rapidly but have always worked very hard to maintain a family-type atmosphere among our employees that has now grown to 18,000," Boyd said.