Boyd strikes again; Wynn vs. Wynn III

Continuing its thrust into North Las Vegas, a suddenly acquisitive Boyd Gaming has obtained Aliante Casino Hotel & Spa. Unlike its surprise, if still unconfirmed, swoop upon Cannery Casino Resorts, here Boyd is snapping up a property we knew was on the market. For $380 Aliantemillion, Boyd gets what it cost Station Casinos $662 million to build. (Station lost the property in a debt-for-equity swap.) Deutsche Bank analyst Carlo Santarelli writes that the deal “fills a geographic hole in the locals portfolio.” Boyd expects cost savings of $8 million right off the top by integrating stand-alone Aliante into a larger corporate whole. At its present rate of cash flow, Aliante will give Boyd a 4% return on investment, so Boyd better have a lot of B Connected members up in that neck of the woods, which is at far north end of development in the Las Vegas Valley. Indeed, by paying almost 13X cash flow for a locals casino (nearly twice the going rate), it could be argued that Boyd got taken to the cleaners, possibly motivated by the chance to taunt Station by obtaining one of its former trophy properties. Santarelli thinks Boyd could almost double Aliante’s cash flow, in which case the acquisition makes somewhat more sense. (JP Morgan analyst Joseph Greff, with a touch of understatement, called the deal “somewhat rich.”) On the bright side, Aliante turned a $6 million profit last year on $84 million in revenue. And by buying Aliante, would Boyd have made a purchase of Cannery suddenly redundant?

Boyd management told analysts they think Aliante is on a three-to-five-year trajectory boyd-gaming-200toward a 10.5% ROI. Aliante is a “well-built, well-maintained and will require limited additional capital in the near term.” explained CEO Keith Smith. “Given this was an orphan property owned by private equity, it lacked the benefit of the much needed LV locals rewards program BYD possesses,” Santarelli writes.

“Furthermore, we expect BYD to benefit from population growth and broader business development in the local area,” Santarelli continued, including facilities for Faraday Future and Hyperloop Technologies, and projected industrial projects/distribution centers, in an area where casino revenues grew 3% last year, outpacing the rest of the valley. “The future is very bright in that area. It’s not happening tomorrow,” Smith allowed, “it’s not happening next month … but over the next several years, I think there are just great opportunities for that market to continue to grow.”

Boyd will pay for Aliante from cash on hand, and gets 1,837 slots and 30 table games, in addition to a 202-room hotel. If the deal goes sideways, Boyd is required to pay $30 million. With Boyd on the warpath, you have to wonder at the priorities of Station, which is spending literally hundreds of millions to buy LLCs from CEO Frank Fertitta III but hasn’t said “boo” about growing the company.

* In case you’re among those who wonder why Circus Circus has never been integrated into M Life (but did get the old Sahara player database), MGM Resorts International‘s Yvette Monet says, “Our guests love the current program. The property may evaluate at some point whether they should incorporate into the M Life program, but for now, this program is for keeps.” We know that CEO Jim Murren has sworn that the clown casino is there to stay, but policies like this don’t exactly dispel doubt over Circus’ longtime future.

* The nastiness of the Elaine Wynn vs. Steve Wynn feud shows no signs of abating. Wynn Resorts board member and former Nevada governor Bob Miller was recently deposed for three days straight. Miller’s importance in the lawsuit is that he was the head Wynn_BG1of the nominating committee and, according to Ms. Wynn’s attorneys, they are “seeking much-needed clarity as to the process leading to the Board’s unprecedented decision not to renominate Ms. Wynn — the only time in Wynn Resorts’ history that a director has been denied renomination.”

Mr. Wynn’s legal team rejoined, “Elaine Wynn’s recent actions are self-serving and vindictive. By attempting to sensationalize a routine legal filing, Elaine Wynn demonstrates her desperation to damage not only the company, but as many people associated with it as possible.” At this rate, the conflict will be resolved by nothing short of mud wrestling.

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