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Sale of Desert Inn in Las Vegas is Canceled

But Bloomberg News said that the deal was a casualty of the offer made in January by Sun's chairman, Sol Kerzner, to buy the portion of Sun that he doesn't already own. That pending offer led to delays by Nevada regulators in approving the Desert Inn sale, a Starwood spokesman told Bloomberg.

The companies had announced last May that Sun would pay $275 million cash for the Desert Inn, which is one of the oldest names on the Strip. It occupies 25 acres there, and the deal also included the 140-acre Desert Inn golf course and another 32 acres with Strip frontage south of the Desert Inn, near the Venetian.

Las Vegas had expected to get a major international casino player with this transaction. Kerzner had developed luxury hotel-casinos in South Africa. He left that business and formed Sun International in 1995.

Based in the Bahamas, Sun International bought Resorts International in Atlantic City. It also owns the Atlantis resort in the Bahamas and developed and manages Mohegan Sun, an Indian casino complex in Connecticut.

Kerzner had plans for a major development at the Desert Inn site. The hotel has 715 rooms, which is tiny by the standards of Strip mega-resorts.

Starwood, which owns the Westin and Sheraton hotel chains, got the Desert Inn in 1998 when it bought ITT Corp. ITT had spent $200 million renovating the hotel-casino into an upscale facility.

Starwood still plans to sell the property. In today's announcement, the companies said that if Starwood receives less from a new buyer than Sun had planned to pay, Sun will make up half of the difference, to a maximum of $15 million.

If Starwood gets a higher price, it will pay Sun half of the difference.

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