LAS VEGAS-Tropicana Hotel & Casino owner Aztar Corp. of Phoenix today terminated its merger agreement with locally based Pinnacle Entertainment Inc. and promptly entered into one with Wimar Tahoe Corp. (dba Columbia Entertainment), the gaming subsidiary of Fort Mitchell, KY-based Columbia-Sussex Corp. The termination required a $78-million payment to Pinnacle, which was comprised of a $52.2-million break-up fee and another $25.8 million for legal expenses.The agreement with Columbia is for $54 per share in cash for common stock and $571.13 per share for the holders of Aztar’s Series B preferred stock. In addition, Columbia has made a $313-million non-refundable deposit that Aztar, $78 million of which is meant to cover the termination fee to Pinnacle. The offer also provides for a daily $0.00888 increase in the purchase price if the deal isn’t closed within 180 days and a $0.01184 daily increase beginning at 270 days if the deal still isn’t consummated. Columbia has a signed $2.97-billion financing agreement with Credit Suisse.Aztar on Monday determined that Columbia’s $54-per-share all-cash bid was superior to its $51-per-share agreement with Pinnacle. According to the merger agreement, Pinnacle had three days to match the offer or see their agreement terminated. Pinnacle announced this morning that its board of directors opted not to increase the offer. Aztar then had until 2 p.m. today (Friday, May 19) to wire the termination fee to Pinnacle and accept Columbia’s offer or it would expire.Aztar’s prize possession is the 34-acre Tropicana resort here, which is viewed as one of the last big redevelopment opportunities on the Las Vegas Strip. The property is located at Las Vegas Boulevard and Tropicana Avenue. The aging resort is surrounded by the MGM Grand, Excalibur, Luxor, Monte Carlo and New York-New York mega-resorts.

In its most recent annual report, the company said it planned to raze the Tropicana, develop a billion-dollar resort on the north half of the site and sell the remainder into a joint venture. As tentatively envisioned, the north site would hold 2,725 hotel rooms and suites; 200,000 sf of dining, entertainment and retail facilities; a 100,000-sf casino; a 3,800-car parking garage; and a four-acre rooftop pool recreation deck overlooking the Strip.

Since March 13, when Pinnacle and Aztar agreed to a merger at $38-per-share, there have been no less than 15 bids. Columbia’s latest bid is 40% higher than the original bid. Prior to Columbia’s $54 all-cash bid, JP Morgan stated in an opinion that Pinnacle’s bid should be deemed superior because “a merger with a strategic sponsor such as PNK would not only be good for AZR shareholders, in our view, but also good for other stakeholders in the company such as employees.”The latest opinions from analysts said Pinnacle should take its $78-million break-up fee and walk away. Pinnacle already is spending $800 million to build two casinos in St. Louis, and could explore other casino purchases on the Strip, according to analysts. The Sahara hotel-casino, for example, is supposedly being marketed by CB Richard Ellis.

In addition to the Tropicana Las Vegas, Aztar also owns the Tropicana in Atlantic City, which showed strong growth in 2005. All told, it owns seven casinos in six markets. Pinnacle does not have any casinos in Las Vegas or Atlantic City. Rather, it offers casinos and gaming resorts in Indiana, Mississippi, Louisiana, Missouri and Argentina.

Columbia Sussex, which obtained its first gaming license in 1990, owns and operates several casinos, including four in Nevada. The four Nevada casinos are Caesars Tahoe and the Horizon in Lake Tahoe, River Palms in Laughlin and the off-Strip Westin. If a merger agreement is executed, Columbia says it would expect to divest the Casino Aztar riverboat casino in Caruthersville, MO prior to closing the transaction.

For previous articles on the bidding war for Aztar, click on one of the following links:

  • May 19: Pinnacle Stands Pat, Waits on $78M Kill Fee
  • May 16: Columbia’s Bid in Better, Aztar Says
  • May 15: Pinnacle, Columbia Waiting on Aztar
  • May 9: Pinnacle Remains First in Line for Aztar
  • May 5: Pinnacle Raises Offer, Aztar Remains Silent
  • May 4: Ameristar Backs Out, Pinnacle On Deadline for Aztar
  • May 3: Q1 Revenue Surges for Pinnacle Link Text
  • April 28: Pinnacle Tops Ameristar’s Bid for Aztar
  • April 25: Ameristar Raises Stakes
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