Las Vegas NowBoyd Gaming Looking to Buy Station Casinos

Boyd Gaming Looking to Buy Station Casinos

Boyd Gaming says it has the cash and it's ready to buy most of Station Casinos. The deal would be nearly $1 billion.

In an unsolicited offer, Boyd feels like it can buy Stations for a steal. Deutsche Bank Gaming Analyst Bill Lerner agrees, "Boyd is in a position to write a check for this right now."

In a letter to Station Casinos Chairman, President, and CEO Frank Fertitta, Boyd Gaming offered to pay cash for all or part of Stations. The first deal offered $950 million for everything Station Casinos owns, except Boulder, Palace, Sunset Stations and Red Rock Casino.

Lerner says most of the debt that pushed the company into a planned bankruptcy is tied to those properties and it's the reason the company is in so much trouble, "I give this a large weight. It's a function of how much debt they have incurred in order to go private. Then that has been exacerbated by the downward pressure on cash flow because of this economic environment."

He adds that this offer makes sense for Boyd Gaming, "Our first cut suggests that it could be done in an accretive manor for Boyd's earnings. It could help Boyd's earnings."

It's a company that understands the locals market.

Boyd also has $2 billion in a line of credit taken out to build Echelon. Now that the project is on hold, the company can use that money for Stations.

Station Casinos executives responded saying Boyd's proposal was unsolicited and that they plan to continue working with lenders and bondholders on a reorganization plan. But they do intend to take a look at Boyd's offer.

Bill Lerner's employer, Deutsche Bank, has done business with Boyd Gaming in the last year, but Lerner does not hold any direct interest in the company.